IMF to reassess India's FY 21-22 growth prediction amid COVID surge; may drop from 12.5%

In a setback for India, IMF on Thursday has said that it will revisit its forecast for India's growth pegged at 12.5% later, due to the rising COVID-19 cases, as per news reports. Addressing a press conference, IMF spokesman Gerry Rice said that COVID crisis in India would have spillover effects for the region and global pandemic depending on how long the crisis lasts. Currently, India 35,66,398 active cases,17,280,844 recovered cases and 2,30,168 fatalities.

IMF to revisit India's GDP

"We're all watching what is happening in India with concern. There will be spillovers through the contingent on how deep and how long the severity of this crisis continues," Rice said.  In April, IMF forecast 12.5% growth in India's economic output in FY 21-22.

 IMF projects 12.5% growth

On 6 April, IMF projected an impressive 12.5 percent growth rate for India in 2021, stronger than that of China, the only major economy to have a positive growth rate last year during the COVID-19 pandemic. The Washington-based global financial institution, in its annual World Economic Outlook ahead of the annual Spring meeting with the World Bank, said the Indian economy is expected to grow by 6.9 per cent in 2022. Notably in 2020, India's economy contracted by a record eight per cent, the International Monetary Fund (IMF) said as it projected an impressive 12.5 per cent growth rate for the country in 2021.

China, on the other hand, which was the only major economy to have a positive growth rate of 2.3 per cent in 2020, is expected to grow by 8.6 per cent in 2021 and 5.6 per cent in 2022. Chief Economist at IMF Gita Gopinath said: “We are now projecting a stronger recovery in 2021 and 2022 for the global economy compared to our previous forecast, with growth projected to be 6 per cent in 2021 and 4.4 per cent in 2022”. In 2020, the global economy contracted by 3.3 per cent.

According to the report, after an estimated contraction of –3.3 per cent in 2020, the global economy is projected to grow at 6 per cent in 2021, moderating to 4.4 per cent in 2022. Recoveries are also diverging dangerously across and within countries, as economies with slower vaccine rollout, more limited policy support, and more reliant on tourism do less well, said Gopinath. The global economy shrank by 4.3 per cent last year, over two-and-a-half times more than during the global financial crisis of 2009.