Context: Recently, the International Monetary Fund (IMF) forecast India’s economy to contract 4.5% in 2020-21, changing from its previous estimate of 1.9% expansion, in its update to the Global Economic Outlook.

Key Points

• The updated World Economic Outlook shows India’s GDP will fall 4.5% this year, far worse than expected in April just after the pandemic first took hold outside of China.
• Mexico will see a double digit decline of 10.5% while Brazil just misses that mark with a drop of 9.1%. 
• Argentina is projected to fall 9.9%, with the country already in the middle of a massive debt crunch on top of the health and economic crises.  
• During the global financial crisis in 2009, these emerging markets, along with China, were booming, supporting the global economy even as advanced nations faced severe recessions.
• Meanwhile, South Africa’s GDP is seen dropping 8%, while oil-producer Nigeria falls 5.4%, it said. 
• The pandemic has sparked an economic “crisis like no other,” sending world GDP plunging 4.9% this year and wiping out $12 trillion over two years, the IMF said. 

Jobs destroyed 

• Worldwide business shutdowns destroyed hundreds of millions of jobs, and the prospects for recovery — along with the forecasts themselves — are steeped in “pervasive uncertainty” with the virus still rife, the IMF said.  
• The U.S. economy is set to contract 8% in 2020, while China fares slightly better, posting growth of 1%, the report said.  
• The IMF cautioned that trade and geopolitical tensions between the world’s largest economies could undercut a modest recovery in 2021.