IMF Revises India’s Growth Rate to 12.5% in CY 2021

By Aditya Raghunath

Investing.com -- Even as COVID-19 cases in India double at a record rate, hitting the 1 lakh figure for two consecutive days, the IMF (International Monetary Fund, has estimated India’s growth rate at 12.5% for 2021. This is a very impressive number considering that the growth rate in 2020 contracted by approximately 8%.

This estimate is also notable because it puts India ahead of China, the only major economy to have a higher growth rate than India. China's GDP was up 2.3%, during the pandemic hit 2020. For 2022, IMF has estimated India’s growth rate at 6.9%. China is estimated to grow at 8.6% in 2021 and 5.6% in 2022.

The IMF is optimistic about global recovery in 2021 and 2022. IMF Chief Economist, Gita Gopinath, said, “We are now projecting a stronger recovery in 2021 and 2022 for the global economy compared to our previous forecast, with growth projected to be 6% in 2021 and 4.4% in 2022.” In 2020, the global economy contracted by 3.3%.

However, Gopinath cautions that governments and policymakers will have to continue supporting their economies and deal with higher debt levels than prior to the pandemic. The measures will have to be targeted and have to last a lot longer, if need be, she said.

“Right now, the emphasis should be on escaping the health crisis by prioritising health care spending, on vaccinations, treatments, and health care infrastructure. Fiscal support should be well targeted to affected households and firms,” she said.