A United Nations report has projected that India's economy will contract by 9.6 per cent in 2020 as lockdowns and other containment efforts to control COVID-19 slashed domestic consumption without halting the spread of the virus. The report said that the economy is forecast to recover and clock a 7.3 per cent growth in 2021 but slow down to 5.9 per cent in 2022.
According to the latest World Economic Situation and Prospects released by the UN, the world economy shrank by 4.3 per cent in 2020- over two and half times more than 2009's global financial crisis.
The modest recovery of 4.7 per cent expected in 2021 would barely offset the losses of 2020, the report added.
UN Secretary-General Antonio Guterres said the world is "facing the worst health and economic crisis in 90 years. As we mourn the growing death toll, we must remember that the choices we make now will determine our collective future."
Further the report highlighted how the pandemic has wreaked havoc on labour market in the developing world. By mid-2020, unemployment rates had quickly escalated to 23 per cent in India, according to the UN report.
According to the report's analysis, East Asia is projected to recover from a low base, with growth rebounding to 6.4 per cent in 2021, before moderating to 5.2 per cent in 2022.
It also projected that China would remain the region's main driver of growth, with GDP growth projected to rebound to 7.2 per cent in 2021, from 2.3 per cent in 2020.
China's economic recovery, however, is expected to be uneven across sectors. While infrastructure investment is expected to rebound strongly, private consumption growth is likely to remain moderate, the report said.
Recently, World Bank also estimated that India's economy might contract by 9.6 per cent in FY21.
In its Global Economic Prospects report, the World Bank said that the informal sector, which accounts for four-fifths of employment, has been subject to severe income losses during the Covid-19 pandemic in India.
(Wth PTI inputs)
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