India’s economy will contract by a huge 10.3 per cent this year because of the coronavirus pandemic, the International Monetary Fund said Tuesday, the biggest slump of any major emerging nation and the worst since independence.
Even before the pandemic, Asia’s third-largest economy was struggling to gain traction, and the hit to global activity from the virus and one of the world’s strictest lockdowns combined to deal the country a severe blow.
In its latest report on the global economy, the IMF forecasts that India’s gross domestic product will plunge 10.3 percent this fiscal year ending on March 31, 2021, the biggest contraction since independence.
This represents a sharp downwards revision from the IMF’s previous prediction in June when it said output would shrink 4.5 per cent. In April it was expecting growth of 1.9 per cent.
The IMF expects India to grow 8.8 per cent next year.
India’s projected slump is the largest of any major economy except for Italy and Spain, and the biggest among the main emerging markets.
Among the other countries in the BRICS group, Brazil’s economy will contract 5.8 per cent, Russia 4.1 per cent, South Africa 8.0 per cent while China will grow 1.9 per cent, according to the IMF’s report.
It said the global recovery will “likely be long, uneven, and uncertain” with prospects having worsened for some emerging economies, with the exception of China but including India.
Between April and June the Indian economy shrank 23.9 percent, official figures showed, as the harsh lockdown imposed in March slowed activity to a near-halt.
The shutdown in the vast country of 1.3 billion people left vast numbers of people jobless almost overnight, including tens of millions of migrant workers in the shadow economy.
The government has since been easing restrictions to kickstart the economy, this week announcing a further stimulus package including loans to boost consumer spending during India’s important upcoming festive season.
This is despite the coronavirus continuing to ravage India, with more than seven million infections, second only to the United States, and almost 110,000 deaths.