Coronavirus impact: IMF projects India’s GDP to contract 10.3% in 2020

The International Monetary Fund (IMF) on Tuesday projected that Indian economy, severely hit by the coronavirus pandemic shall contract by a massive 10.3 per cent this year.

However, India is likely to bounce back with an impressive 8.8 per cent growth rate in 2021, thus regaining the position of the fastest growing emerging economy, surpassing China's projected growth rate of 8.2 per cent, the IMF said in its latest 'World Economic Outlook' report.

The IMF in its report said that revisions to the forecast are particularly large for India, where Gross Domestic Product (GDP) contracted much more severely than expected in the second quarter.

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"As a result, the economy is projected to contract by 10.3 per cent in 2020, before rebounding by 8.8 per cent in 2021," it said. In 2019, India's growth rate was 4.2 per cent.

According to the IMF, India is among those likely to suffer the greatest damage from global warming, reflecting its initially high temperatures. For India, the net gains from climate change mitigation-relative to inaction-would be up to 60-80 per cent of GDP by 2100.

Last week, the World Bank said India's GDP this fiscal is expected to contract by 9.6 per cent.

"India's GDP is expected to contract 9.6 per cent in the fiscal year that started in March," the World Bank said in its latest issue of the South Asia Economic Focus report.

"The situation is much worse in India than we have ever seen before," Hans Timmer, World Bank Chief Economist for South Asia, told reporters during a conference call last week. "It is an exceptional situation in India. A very dire outlook," he said.

Meanwhile, Massive injections of government aid kept world economies from plunging further, though growth in 2021 is expected to be slightly slower than forecast in June, according to the Washington-based crisis lender's World Economic Outlook.

Around $3 trillion in stimulus spending kept the United States from a disastrous contraction and growth is expected to decline just 4.3% this year. China will see its economy expand by 1.9%.

Even amid the improved news, countries like India, Spain and Italy will see double digit declines, while Britain just misses that threshold with a 9.8% contraction, the IMF said.

(With inputs from agencies)