The International Monetary Fund (IMF) retained India’s growth projection at 9.5 per cent for 2021, after it downgraded the growth rate by three percentage pointsfrom 12.5 per cent in July, following the severe second wave of COVID-19 pandemic in the country.
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The Indian economy – which contracted by a record 7.3 percent due to the pandemic, is expected to grow at 8.5 per cent in 2022, according to IMF’s latest World Economic Outlook (WEO) report released on Tuesday.
The growth forecast of 9.5 per cent for 2021 is similar to the projection for fiscal 2021-22 made by the Reserve Bank of India (RBI) in its latest monetary policy committee (MPC) meeting held on October 8.
The World Bank pegged India’s growth forecast to 8.3 per cent for the current financial year 2021-22, compared to the earlier estimate of 10.1 per cent. The country’s growth will be aided by an increase in public investment and incentives to boost manufacturing, said the World Bank in its report.
India’s economy grew by 20.1 per cent in the first quarter of the current fiscal and the sharp jump in the gross domestic product (GDP) was mostly on the back of the low base effect as the economy had contracted by a record 24.4 per cent in the year-ago period – when COVID-19 first hit the country.
The IMF downgraded the global economic projection to 5.9 per cent from six per cent, in its latest WEO update, released ahead of its annual meeting and the World Bank.
United States and China witnessed a major cut in growth projection. IMF pegged the growth rate for US at six per cent – down by one percentage points, and China’s at eight per cent – down by 0.1 percentage point.
The advanced economy group is expected to regain its pre-pandemic trend path in 2022 and exceed it by 0.9 per cent in 2024, according to Gita Gopinath, Chief Economist, IMF.
“By contrast, aggregate output for the emerging market and developing economy group (excluding China) is expected to remain 5.5 per cent below the pre-pandemic forecast in 2024, resulting in a larger setback to improvements in their living standards,” she added.
The foremost policy priority is to vaccinate at least 40 per cent of the population in every country by end-2021 and 70 per cent by mid-2022, according to Ms Gopinath.
“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,” added the Indian-American economist.