Indian economy to bounce back with 8.8% growth in 2021 after contracting by 10.3% in 2020
Published On: Wednesday, October 14, 2020 | By: Team KnowMyStock
The International Monetary Fund (IMF) yesterday (13th October 2020) slashed the growth forecast for India saying that the country’s economy will contract 10.3% in FY21, the third steepest decline after Spain and Italy, and the sharpest fall among emerging markets and developing countries. This is the second downgrade for India by IMF after it reversed its forecast of 1.9% growth in April to a 4.5% contraction in June for 2020-21. The economies of Spain and Italy are seen shrinking by 12.8% and 10.6%, respectively. IMF’s forecast for the Indian economy is gloomier than the Reserve Bank of India’s projection of a 9.5% contraction in the real gross domestic product (GDP) in the full fiscal. The economy shrank an unprecedented 23.9% in the June quarter. Last week, the World Bank said the situation in India is worse than ever, forecasting the country’s economy will shrink 9.6% in FY21, much steeper than the 3.2% fall estimated by IMF in June.
As per the report, all emerging market and developing economy regions are expected to contract this year, including India and Indonesia, which continue to try to bring the pandemic under control.
Retail inflation in India in September rose to an eight-month high of 7.34% as food inflation reached double-digits at 10.68%.
Among debtor countries, smaller deficits are projected for India on the back of lower oil prices and weak domestic demand.
IMF said that the revisions for China and India together mostly account for the smaller shares of emerging Asia and emerging market and developing economies based on an updated set of purchasing-power-parity weights for individual economies.
The estimates for India are in contrast to global growth which is projected at –4.4% in 2020, 0.8 percentage point above the June forecast.
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