Global Economic Prospects Report
The World Bank recently released the Global Economic Prospects report.
What are the key findings of the Global Economic Prospects report?
- According to the report the Indian economy is to contract by 9.6% in 2020-21. The Indian economy is to recover 5.4 percent in 2021-22. The contraction in Indian economy will be mainly due to sharp decline in household spending and private investment. The informal sector that accounts to four fifth of employment in the country has been badly affected.
- On the other hand, the world economy is to expand by 4% in 2021.
- The services and manufacturing sector are gaining Momentum.
According to World Bank India is facing its first technical recessionary phase.
What is Technical recessionary phase?
When the GDP growth is negative for two consecutive quarters or more than the period it is called technical recessionary phase. In India, the Gross Domestic Product declined by 23.9 percent between April and June quarter. The Gross Domestic Product growth rate contracted by 7.5 % during the July and September quarter. This clearly shows that the GDP growth of India has been negative for two consecutive quarters. Thus, India is in a technical recessionary phase.
What is the state of unemployment in India?
According to the Centre for Monitoring Indian Economy more than 50 lakh salaried persons lost their jobs during the covid-19 pandemic.
What are the predictions made by other Global rating agencies?
Several Global rating Agencies have made their predictions for Indian economy. In September 2020 the switch agency sharply lowered its growth forecast of India. It said that the gross domestic product of the country for the financial year 2020-21 is expected to contract by 10.5%. Earlier it had predicted a contraction of 5%. The Asian Development Bank predicted that India’s growth will contract by 9% in 2020-21.
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