IMF further contracts India’s, world’s predicted growth rate in FY21

NEW DELHI: The International Monetary Fund (IMF) has projected a deeper economic growth for both India and the world in financial year 2021 (FY21), citing longer lockdown durations and slower than anticipated economic recovery rates.

In the June update of ‘A Crisis Like No Other, An Uncertain Recovery’ of its flagship World Economic Outlook (WEO), the IMF has projected a -4.5 per cent growth rate for India and a -4.9 per cent global growth rate for FY 21. This estimate published by the IMF in June is 2.6 percentage points below the estimate it had put out for India’s growth in the April edition of the WEO, putting the growth at -1.9 per cent for India. Similarly, its April estimate for global growth was 1.9 percentage points above the June estimate at -3.0 per cent.

The IMF further said that the Covid-19 pandemic has had a stronger-than-anticipated effect on the world economy and the real recovery rate is much slower than that anticipated. Adding to it, the IMF said that this time, there are significant downside risks and a higher-than-usual degree of uncertainty around its forecast.

The latest assessment has also toned down the bounce back in FY22 to 6% against a stronger 7.4% growth forecast in April. In 2021, global growth is projected at 5.4%, marginally lower than 5.8% it expected in April.