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.
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