IMF cuts India’s growth rate to 1.9% , says world set to face worst recession since 1930s

The global economy is moving in to worst recession since the Great Depression of the 1930s, exceeding the repercussions that we saw  during the global financial crisis over a decade ago, says the International Monetary Fund’s latest World Economic Outlook update.

“The Great Lockdown, as one might call it, is projected to shrink global growth dramatically. A partial recovery is projected for 2021, with above trend growth rates, but the level of GDP will remain below the pre-virus trend, with considerable uncertainty about the strength of the rebound. Much worse growth outcomes are possible and maybe even likely,” IMF’s Chief Economist Gita Gopinath said.

Global economy is projected to contract sharply by 3 percent in 2020 versus a growth of 2.9 percent in 2019. When the pandemic fades in the second half of 2020, global economy is likely to grow by 5.8 percent in 2021, as economic activity normalizes , said IMF Chief economist.

India’s growth forecast has also been decreased sharply by 480 basis points to 1.9 percent for FY21 as against a 4.2 percent growth seen in FY20.

“This crisis is like no other, the shock is large. The output loss associated with this health emergency and related containment measures likely dwarfs the losses that triggered the global financial crisis”.”  Report read.

“There is continued severe uncertainty about the duration and intensity of the shock”, it added.

Among advanced economies, particularly, United State’s economy will shrink by 5.9 percent in 2020, and the European Area by 7.5 percent. Emerging market and developing economies have also been cut by 1 percent in 2020 vs growth of 3.7 percent seen in 2019.

BY 2021, growth in emerging market and developing economies expected to rise to 6.6 percent. China is seen growing by 1.2 percent in 2020 and by 9.2 percent in 2021.