New Delhi (NVI): The International Monetary Fund (IMF) today upgraded its gross domestic product (GDP) projection for India to 12.5% 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 global financial institution, in its annual World Economic Outlook said India’s economy is expected to grow by 6.9 per cent in 2022.
In 2020, economy contracted by a record eight per cent, the IMF said as it projected an impressive 12.5 per cent growth rate for the country in 2021.
According to the reports, China, on the other hand, 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”.
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.
The contraction for 2020 is 1.1 percentage points smaller than projected in the October 2020 World Economic Outlook (WEO), reflecting the higher-than-expected growth outturns in the second half of the year for most regions after lockdowns were eased and as economies adapted to new ways of working.
The projections for 2021 and 2022 are 0.8 percentage point and 0.2 percentage point stronger than in the October 2020 WEO, reflecting additional fiscal support in a few large economies and the anticipated vaccine-powered recovery in the second half of the year, the report said.
In a blog post, Gopinath said the pandemic is yet to be defeated and virus cases are accelerating in many countries.
“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,” she added.
She further said policymakers will need to continue supporting their economies while dealing with more limited policy space and higher debt levels than prior to the pandemic.
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.
The IMF’s top economist said the fund has long supported a global minimum corporate tax, after US Treasury secretary Janet Yellen called on G20 countries to adopt one.
“We are very much in favour of a global minimum corporate tax,” IMF chief economist Gopinath said.
The IMF said the eurozone economy would expand faster than previously expected in 2021, but Europe will be slower than the US to recover from the pandemic shock.
In its latest outlook for the world economy, the fund said that gross domestic product in the 19 countries that use the euro would grow by 4.4 per cent this year.
The number was up by 0.2 percentage points from a forecast in January, but trailed the institution’s new prediction for the US, where GDP growth is now expected to hit 6.4 per cent, a big revision upwards of 1.3 per cent.
While the Chinese economy already returned to pre-pandemic health last year and the United States is expected to do so this year, Europe will not do so until mid-2022, the IMF said.