India’s economy is estimated to grow by 9.5 per cent this year, as per the new World Economic Outlook (WEO) report by the International Monetary Fund (IMF). Also, the IMF data projects that in 2022, the country’s economy is likely to grow at 8.5 per cent.
The IMF projection for 2021 has stayed the same as the estimate for 2021 made in the July version of the World Economic Outlook report. However, the October IMF projection of a 9.5 per cent of India GDP growth rate for the current year is a drop of three percentage points from the estimate made in April 2021 (12.5 per cent). The April 2021 WEO report had also projected an economic growth rate of 6.9 per cent for India in 2022.
Further, the IMF has also increased its inflation projection for India to 5.6 per cent for the current fiscal from the earlier projected 4.9 per cent in April, as it cited rising inflation risks globally.
Past IMF projections
The IMF projection in April 2021 of 12.5 per cent India GDP growth rate this year was stronger than China’s. In 2020, China was the only leading economies to have had a positive rate of growth at 2.3 per cent. As per IMF projections in April this year, China was expected to grow by 8.4 per cent in 2021. It further pegged China’s growth at 5.6 per cent for 2022. India’s economy had contracted by 7.3 per cent for 2020-21 because of the pandemic and the lockdowns that followed. In the fourth quarter of 2020, India’s economy showed signs of growth as it posted a growth rate of 1.6 per cent, therefore restricting the whole year contraction to 7.3 per cent.
However, by July 2021, the situation had changed, with India just having come out of a severe second wave of the pandemic followed by another round of lockdowns and curbs. The IMF, in its WEO report of July 2021, slashed India GDP growth rate by 3 percentage points to 9.5 per cent for 2021. This was in line with India’s central bank, the RBI’s projection of 9.5 per cent from its earlier 10.5 per cent in its second monetary policy committee meeting of early June.
Global growth rate
For China, the IMF projection in July 2021 was lowered by 0.3 percentage points to 8.1 per cent growth for the current year and 5.7 per cent for 2022. Meanwhile, the IMF also pegged the global economic growth rate at 6 per cent for 2021 and 4.9 per cent for the next year, unchanged from the projections made in April 2021. The IMF had then noted that the faultline in access to vaccines would create divergent economic recovery paths among nations.
In its latest update of the World Economic Outlook by the IMF (October 2021), the global economic growth rate is at 5.9 per cent for 2021 and 4.9 per cent for 2022. The US, according to the IMF, is expected to grow at 6 per cent in 2021 and 5.2 per cent in 2022. China is expected to grow at 8 per cent in 2021 and 5.6 per cent in 2022. As per the IMF, although the downgrade is only by one percentage point, there is a divergence in growth across economies – the advanced economies block and the emerging and developing economies barring China. While the total output for advanced economies is expected to cross the pre-pandemic trend by 0.9 per cent come 2024, the same for the developing and emerging markets barring China is expected to stay 5.5 per cent below the pre-pandemic trends in 2024. The IMF has cited the disparity in vaccine rollouts in different economies as a reason for the divergence in growth rates.
The IMF, in its latest World Economic Outlook, projects an India GDP growth rate of 9.5 per cent for 2021 and 8.5 per cent for 2022, the same as the July 2021 projections. Further, the IMF has also increased India’s inflation projection to 5.6 per cent from the April 2021 estimate of 4.9 per cent.
What is the IMF projection for India’s economic growth rate for 2021 and 2022?
The IMF projection for India’s economic growth rate for 2021 stands at 9.5 per cent, while it is 8.5 per cent for 2022, unchanged from its July 2021 projections.
What is the global economic growth rate projection for 2021 and 2022, as per the IMF?
The world’s economy is expected to grow at 5.9 per cent (2021) and 4.9 per cent (2022), according to the IMF’s World Economic Outlook in October 2021.
What was India’s economic contraction rate in 2020-21?
India’s GDP growth contracted by 7.3 per cent for the fiscal year 2020-21.