The IMF yesterday lowered its quarterly forecast of India’s economic growth for 2020-21 to -4.5%, from about 1.9% it had anticipated in April. In just three months, India’s growth forecast has been lowered by 6.4 percentage points. Along with a reduction in India’s forecast, IMF has lowered the forecast for the rest of the world. All the major economies, with the exception of China, are forecast to contract this year.
Also read: IMF sees 4.5% contraction for India in 2020-21
This forecast should be kept in mind when the government looks for “green shoots” of revival. A partial resumption of economic activity after the lockdown is not the same as incipient signs of economic revival. In fact, IMF has also lowered its growth forecast for next year as well. We are still at an early stage of reopening and it’s not possible to accurately judge the extent of damage wrought by the Covid-19 outbreak. Therefore, it’s important for the government to remain focussed on the reopening and be ready to lend support wherever needed.
