India keeps top global spot with 9.5% GDP growth

India keeps top global spot with 9.5% GDP growth

United Nations: India has emerged from a “very tough second wave” of Covid-19, Gita Gopinath, the International Monetary Fund’s (IMF) Chief Economist, said on Tuesday at the release of the flagship report that showed India continuing to be the world’s fastest growing major economy clocking a growth rate of 9.5 per cent this fiscal year and 8.5 per cent in the next.
The IMF’s World Economic Outlook (WEO) report kept the gross domestic product (GDP) growth projections it had made in July while India was in the grip of Covid-19’s second wave and had cut by 3 per cent its forecast of 12.5 per cent made in April before the pandemic’s resurgence.
Briefing reporters at the release of the report in Washington, Gopinath said: “India came out of a very, very tough second wave and that led to a big downgrade in July but we have no change.” “India is doing well in terms of vaccination rates and that’s certainly helpful,” she said. India does, however, face many challenges, she said.
“As of now, you know there are many challenges that the Indian economy always does face with regard to the financial market, with regard to the fact that the virus has not gone yet,” Gopinath said. Asked if the large fiscal deficit in India was a major concern, Malhar Nabar, the Deputy Division Chief in IMF Research Department, said while a medium-term strategy was needed to bring it down, it was still possible to meet the pressures from any future pandemic upsurge.
“We think that there’s still room to provide more support if needed, if the pandemic takes a turn for the worse, and to provide it in a targeted manner to the worst affected households and firms,” he said.
“But going forward over the medium term, it would be important to put in place, credible, medium term strategy to bring down the debt to GDP ratio and create space to meet the future development needs and infrastructure needs,” he added.
The WEO said that India’s Covid-battered economy had shrunk by 7.3 per cent in the last fiscal year. Its long-term forecast for India’s GDP growth is 6.1 per cent in 2026.
In the WEO tables, China followed India with 8 per cent this year and 5.6 per cent the next — a reduction of 0.1 per cent for both years from the forecast made in July.
The UK came next with 6.8 per cent growth this year, followed by France at 6.5 per cent, and the US at 6 per cent. The global economy is projected to grow 5.9 per cent in 2021 and 4.9 per cent in 2022 — 0.1 percentage point lower for 2021 than in the July forecast.
The WEO said: “The downward revision for 2021 reflects a downgrade for advanced economies — in part due to supply disruptions — and for low-income developing countries, largely due to worsening pandemic dynamics.”
Gopinath, in her foreword to the WEO, said: “The global recovery continues but the momentum has weakened, hobbled by the pandemic.”

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