IMF is the latest to project a sharp contraction for Asia’s third-largest economy. The World Bank expects the economy to decline by 9.6%, while the RBI forecast GDP to plunge 9.5% in 2020-21, but estimates growth to be back in the fourth quarter.
“Revisions to the forecast are particularly large for India, where GDP contracted much more severely than expected in the second quarter,” the IMF said. The US economy is projected to contract by 4.3%, before growing at 3.1% in 2021. China is the only economy that is forecast to grow 1.9% in 2020-21and is expected to rebound to 8.8% next year.
The report said that for many emerging market and developing economies, excluding China, prospects continue to remain precarious. It said this reflects a combination of factors — the continuing spread of the pandemic and overwhelmed healthcare systems, the greater importance of severely affected sectors such as tourism, and the greater dependence on external finance, including remittances. The WEO said all emerging market and developing economy regions are expected to contract this year, including notably emerging Asia, where large economies, such as India and Indonesia, continue to try to bring the pandemic under control.