Washington:
India will reclaim the status of world's fastest-growing economy and will be the only economy that will grow in double-digit, projected International Monetary Fund (IMF).
In its latest World Economic Outlook update released on Tuesday, the IMF predicted that India's gross domestic product (GDP) will grow at the pace of 11.5 per cent in 2021. IMF projections show that India's economy will grow much better than China which is predicted to grow at 8.1 per cent, followed by Spain (5.9 per cent), France (5.5 per cent) and United States (5.1 per cent).
The IMF's growth projections for India in its latest World Economic Outlook Update released on Tuesday reflected a strong rebound in the economy, which is estimated to have contracted by eight per cent in 2020 due to the pandemic.
In its latest update, the IMF projected a 11.5 per cent growth rate for India in 2021. This makes India the only major economy of the world to register a double-digit growth in 2021, it said.
China is next with 8.1 per cent growth in 2021 followed by Spain (5.9 per cent) and France (5.5 per cent).
Revising its figures, the IMF said that in 2020, the Indian economy is estimated to have contracted by eight per cent. China is the only major country which registered a positive growth rate of 2.3 per cent in 2020.India’s economy, the IMF said, is projected to grow by 6.8 per cent in 2022 and that of China by 5.6 per cent.
With the latest projections, India regains the tag of the fastest developing economies of the world.
IMF report says that although recent vaccine approvals have raised hopes of a turnaround in the pandemic later this year, renewed waves and new variants of the virus pose concerns for the outlook. Amid exceptional uncertainty, the global economy is projected to grow 5.5 per cent in 2021 and 4.2 per cent in 2022.
The 2021 forecast is revised up 0.3 percentage point relative to the previous forecast, reflecting expectations of a vaccine-powered strengthening of activity later in the year and additional policy support in a few large economies. The report further says that third-quarter GDP outturns mostly surprised on the upside (Australia, Euro area, India, Japan, Korea, New Zealand, Turkey, United States) or were in line with expectations elsewhere (China, Mexico).
Among components, private consumption rebounded the most. Investment picked up relatively slowly, except in China. The expenditure decompositions suggest a release of pent-up demand and adjustments to telework. Given the largely one-off nature of such spending, it is likely to dissipate once the adjustments are made. High-frequency data suggest some tapering into the fourth quarter of 2020–for example, in new orders, industrial production, and global trade.
Early this month, IMF Managing Director Kristalina Georgieva had said that India “actually has taken very decisive action, very decisive steps to deal with the pandemic and to deal with the economic consequences of it”.
India, she said, went for a very dramatic lockdown for a country of this size of population with people clustered so closely together. And then India moved to more targeted restrictions and lockdowns.
“What we see is that transition, combined with policy support, seems to have worked well. Why? Because if you look at mobility indicators, we are almost where we were before COVID in India, meaning that economic activities have been revitalized quite significantly,” the IMF chief said.
Commending the steps being taken by the Indian government on the monetary policy and the fiscal policy side, she said it is actually slightly above the average for emerging markets.
“Emerging markets on average have provided six per cent of GDP. In India this is slightly above that. Good for India is that there is still space to do more,” she said, adding that she is impressed by the appetite for structural reforms that India is retaining.