India to grow at 9.5% this year, says IMF
WASHINGTON: India’s economy, which contracted by 7.3% due to the Covid-19 pandemic, is expected to grow by 9.5% in 2021 and 8.5% in 2022, according to latest projections released by the International Monetary Fund on Tuesday. India’s growth projection released by the latest World Economic Outlook remains unchanged from its previous WEO (World Economic Outlook) update of July this summer but is a 1.6 percentage point drop from its April projections.
According to the latest WEO update, released ahead of the annual meeting of the IMF and the World Bank, the world is expected to grow at 5.9% in 2021 and 4.9% in 2022.
Gita Gopinath, chief economist of the IMF, said that compared to their July forecast, the global growth projection for 2021 has been revised to 5.9% and is unchanged for 2022 at 4.9%.
“The outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics. The downgrade also reflects more difficult near-term prospects for the advanced economy group, in part due to supply disruptions,” she said.
“Partially offsetting these changes, projections for some commodity exporters have been upgraded on the back of rising commodity prices. Pandemic-related disruptions to contact-intensive sectors have caused the labour market recovery to significantly lag the output recovery in most countries,” the IndianAmerican economist added.
Observing that the dangerous divergence in economic prospects across countries remains a major concern, she said aggregate output for the advanced economy group is expected to regain its pre-pandemic trend path in 2022 and exceed it by 0.9% in 2024.
“By contrast, aggregate output for the emerging market and developing economy group (excluding China) is expected to remain 5.5% below the pre-pandemic forecast in 2024, resulting in a larger setback to improvements in their living standards,” she added.
Noting that a principal common factor behind these complex challenges is the continued grip of the pandemic on global society, Gopinath said that the foremost policy priority is to vaccinate at least 40% of the population in every country by end-2021 and 70% by mid-2022.
“This will require high-income countries to fulfill existing vaccine dose donation pledges, coordinate with manufacturers to prioritise deliveries to COVAX in the near-term and remove trade restrictions on the flow of vaccines and their inputs,” she said. At the same time, closing the $20 billion residual grant funding gap for testing, therapeutics and genomic surveillance will save lives now and keep vaccines fit for purpose. Looking ahead, vaccine manufacturers and high-income countries should support the expansion of regional production of COVID-19 vaccines in developing countries through financing and technology transfers, she said.
Gopinath said that another urgent global priority is the need to slow the rise in global temperatures and contain the growing adverse effects of climate change.