IMF envisions a sharp 4.4% drop in global growth for 2020

IMF envisions a sharp 4.4% drop in global growth for 2020”

The result "would have been much weaker if it weren't for sizable, swift and unprecedented" response from governments and central banks, she said, again warning of the dangers of removing support too quickly.

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.

Last week, the World bank said India's GDP this fiscal is expected to contract by 9.6 per cent.

The Fund's mission team said they "gained a deeper understanding of the authorities' policy plans to stabilise the economy and put it on a more sustainable and inclusive growth path". The forecasts assume monetary policy is maintained at current settings through 2025, helping to alleviate debt service burdens for many countries.

The IMF called on governments to rethink their spending priorities and direct funding to projects that will boost productivity, including green energy investments and education.

The upward revision in the IMF's 2020 growth forecast reflects in particular better-than-projected second-quarter growth in the United States and the euro area, a stronger-than-anticipated return to growth in China and signs of a more rapid recovery in the third quarter.

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According to the report, in 2021, growth is projected to rebound to 5.2 per cent, -0.2 percentage points below its June projection. That doesn't factor in potential additional fiscal stimulus, though, as President Donald Trump and Democrats continue to wrangle over measures. India saw the steepest forecast reduction, with a 10.3 per cent contraction seen for this year, compared with just 4.5 per cent previously, after a larger-than expected second-quarter contraction.

Among the other countries in the BRICS group, Brazil's economy will contract 5.8 per cent, Russian Federation 4.1 per cent, South Africa 8.0 per cent while China will grow 1.9 per cent, according to the IMF's report.

But emerging markets other than China will see a 2020 contraction of 5.7 per cent, worse than the 5.0 per cent predicted in June.

The global economy will return to growth of 5.2 per cent in 2021, the International Monetary Fund said, but the rebound will be slightly weaker than forecast in June, partly due to the extreme difficulties for many emerging markets and slowing reopening momentum as the virus continues to spread.

Croatia is included in the Fund's Emerging and Developing Europe region, where the GDP is expected to drop 4.6% this year, before rising 3.9% in 2021.

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