IMF cuts India's growth projection to 1.9% in FY21

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New Delhi: The International Monetary Fund (IMF) on Tuesday (April 14) projected India's economic growth to 1.9 per cent for the current financial year, the lowest since the 1991 balance of payments (BoP) crisis and against its 5.8 per cent forecast earlier. But the IMF has placed India as the fastest-growing emerging economies of the world. 

Notably, apart from India, the only other country that will register a positive growth as per IMF is China, for which the organisation has projected a growth rate of 1.2 per cent. For 2021, India's growth rate is projected at 7.4 per cent, while that of China at 9.2 per cent. The United States has been projected to grow at 4.5 per cent and Japan 3 per cent, the IMF report said.

India is likely to record its worst growth performance since the 1991 liberalisation this fiscal year as the coronavirus outbreak severely disrupts the economy, the World Bank said on Sunday.

India's economy is expected to grow 1.5 per cent to 2.8 per cent in 2020-21 fiscal which started on April 1, the World Bank said in its South Asia Economic Focus report. It estimated India will grow 4.8 per cent to 5 per cent in 2019-20 fiscal that ended on March 31.

Most countries, in the advanced economy group, are forecast to contract this year, including the United States (-5.9%), Japan (-5.2%), the United Kingdom (-6.5%), Germany (-7.0%), France (-7.2%), Italy (-9.1%), and Spain (-8.0%), the IMF report said.

"We project global growth in 2020 to fall to -3 per cent. This is a downgrade of 6.3 percentage points from January 2020, a major revision over a very short period," Indian--American Gita Gopinath, the IMF Chief Economist said, adding that the COVID-19 pandemic will severely impact growth across all regions.

The IMF said several economies in the region were forecast to grow at modest rates, including India (1.9%) and Indonesia (0.5%), and others are forecast to experience large contractions (Thailand, -6.7%).

The IMF said that other regions are projected to experience severe slowdowns or outright contractions in economic activity, including Latin America (-5.2%) with Brazil's growth forecast at -5.3% and Mexico's at -6.6%; emerging and developing Europe (-5.2%) with Russia's economy projected to contract by -5.5%.

The Middle East and Central Asia (-2.8%) with Saudi Arabia's growth forecast at -2.3%, with non-oil GDP contracting by four per cent, and most economies, including Iran, expected to contract; and sub-Saharan Africa (-1.6%) with growth in Nigeria and South Africa expected at -3.4% and -5.8% respectively.

"In addition, many countries now face multiple crises ? a health crisis, a financial crisis, and a collapse in commodity prices, which interact in complex ways," Gopinath said.

The global economy has hit the worst recession since the Great Depression in the 1930s due to the raging coronavirus pandemic that has nearly stalled all economic activities across the world. The Great Depression was the worst worldwide economic downturn that lasted for 10 years from 1929, beginning in the US when the New York Stock Exchange on Wall Street crashed and wiped out millions of investors.