The International Monetary Fund (IMF) on Tuesday has projected India's economic growth rate to rise sharply at the historically high level of 12.5 per cent in 2021. This growth rate will also be higher than China. However, China has been the only major economy, whose growth rate was positive even during the epidemic in 2020.
The latest forecasts suggest that India is well placed to experience a solid economic recovery in 2021, in contrast to other emerging markets and developing economies, where it`s likely to take longer to return to pre-crisis levels.
The IMF said in its annual global economic scenario that in 2022, the growth rate of the Indian economy will come to around 6.9 percent. The Monetary Fund has released this report before the annual meeting with the World Bank.
The global financial institution, in its annual World Economic Outlook ahead of the annual Spring meeting with the World Bank said that the growth projection was raised on the basis of "evidence we were getting in the last couple of months in terms of the normalisation of economic activity."
"Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible," IMF chief economist Gita Gopinath said in the latest World Economic Outlook report.
"The outlook presents daunting challenges related to divergences in the speed of recovery both across and within countries and the potential for persistent economic damage from the crisis," Gopinath added.
Gopinath also cautioned that the current wave of the pandemic "is quite concerning."
"Among advanced economies, the United States is expected to surpass its pre-Covid GDP level this year, while many others in the group will return to their pre-COVID levels only in 2022," Gopinath said.
"Within-country income inequality will likely increase because young workers and those with relatively lower skills remain more heavily affected in not only advanced but also emerging markets and developing economies," Gopinath warned, adding that lower levels of female employment were also exacerbating disparities.
As a result, the IMF said governments should continue to focus on "escaping the crisis" by providing fiscal support, including to their healthcare systems. In a second phase, "policymakers will need to limit long-term economic scarring" from the crisis and boost public investment, it added.
"Without additional efforts to give all people a fair shot, cross-country gaps in living standards could widen significantly, and decades-long trends of global poverty reduction could reverse," Gopinath said.
The Survey by the IMF staff is usually published twice a year. It presents IMF staff economists` analyses of global economic developments during the near and medium-term.
