World Bank warns of GDP drop for India amid coronavirus pandemic
New Delhi : The coronavirus pandemic will push global economy into severe recession, emerging economies will shrink for the first time since World War II, said World Bank on Monday.
In 2020, the global economy is likely to shrink to 5.2% Declines in economic growth across region will be driven by severe disruptions to “domestic demand and supply, trade and finance”, the bank said in a report, Global Economic Prospects, which contains an assessment of economic shocks from pandemic shutdowns.
The Indian GDP will drop down to 3.2% in the fiscal year 2020-21, largely due to the impact of coronavirus pandemic.
The International Monetary Fund has slashed its 2010-21 growth projection for India to 1.9% from 5.8% estimated in January. Barclays said it saw 0% growth, while the World Bank cut India’s growth forecast to 1.5-2.8% from 6.1% earlier.
The World Bank in its note on India said: “Stringent measures to control the spread of the virus will heavily curtail activity, despite some support from fiscal and monetary stimulus. Spill-overs from weaker global growth and balance-sheet stress in the financial sector will also weigh on activity.”
“Per capita incomes are expected to decline by 3.6%, which will tip millions of people into extreme poverty this year,” the bank said. Measures to control the pandemic has already caused a “severe contraction”, or negative economic growth in many economies. The bank forecast the most widespread declines in per capital incomes since 1870.
“This is a deeply sobering outlook, with the crisis likely to leave long-lasting scars and pose major global challenges,” said World Bank Group vice-president Ceyla Pazarbasioglu in the report.