India to grow slower at 1.2% as world economy to shrink by 3.2%: UN

Dubai - India would still record the second-highest growth rate among major economies.

The United Nations has slashed India's economic growth projection for the current fiscal year to 1.2 per cent, while forecasting a gloomier scenario of a deep economic contraction by 3.2 per cent this year for a world ravaged by Covid-19.
The dismal global outlook is the sharpest downturn since the Great Depression in the 1930s. "We are now facing the grim reality of a severe recession of a magnitude not seen since the Great Depression," said UN chief economist Elliott Harris.
Despite a slower growth forecast than the previously predicted rate, India would still record the second-highest growth rate among major economies, trailing only China, according to the UN mid-year World Economic Situation and Prospects (WESP) update.
The 1.2 per cent estimate for India for the current year is a drastic Covid-19-fuelled cut from the 6.6 per cent made in January by the UN Department of Economic and Social Affairs.
The UN projection for India in the current fiscal year is less than the 1.9 per cent made by the International Monetary Fund (IMF) last month.
The WESP update expects India's rate of gross domestic growth to increase to 5.5 per cent in the next fiscal year (2021-22) while reducing the third largest Asian economy's growth rate for the last fiscal year to 4.1 per cent from the 5.7 per cent estimated in January.
China is expected to grow by 1.7 per cent this year and increase its rate to 7.6 per cent next year.
According to the update, as the global economy shrinks by 3.2 per cent this year, the developed countries will bear the brunt with their economic growth dropping by five per cent, according to the update.
 
The UN expects South Asia's economies overall to shrink by 0.6 per cent during the current year.
"The global economy is expected to lose nearly $8.5 trillion in output over the next two years due to the Covid-19 pandemic, wiping out nearly all gains of the previous four years. The sharp economic contraction, which marks the sharpest contraction since the Great Depression in the 1930s, comes on top of anaemic economic forecasts of only 2.1 per cent at the start of the year," the UN update said.
In January, before Covid-19 became a pandemic, the UN had forecast a modest acceleration in global growth of 2.5 per cent in 2020.
Launching the report, Harris said the global economic outlook has changed drastically since then, with the pandemic's death toll climbing toward 300,000.
With the large-scale restrictions of economic activities and heightened uncertainties, the global economy has come to a virtual standstill in the second quarter of 2020, he said.
According to the report, nearly 90 per cent of the world economy has been under some form of lock-down, disrupting supply chains, depressing consumer demand and putting millions out of work.
But in a worst-case scenario, the U.N. said the global economy could shrink by 4.9 per cent in 2020 if a second wave of Covid-19 infections flares up and lockdowns continue into the third quarter of the year.
The report said the pandemic is exacerbating poverty and inequality, with an estimated 34.3 million people likely to fall below the extreme poverty line of $1.90 a day in 2020 - 56 per cent of them in Africa.
It said an additional 130 million people may join the ranks of people living in extreme poverty by 2030, dealing a huge blow to global efforts to eradicate extreme poverty and hunger by the end of the decade.
issacjohn@khalejtimes.com

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