The UN slashed India’s projected growth rate to 1.2 per cent in 2020 and forecast that the global economy will contract sharply by 3.2 per cent as the COVID-19 pandemic paralyses the world, sharply restricting economic activities, increasing uncertainties and unleashing a recession unseen since the Great Depression of the 1930s. The World Economic Situation and Prospects as of mid-2020 released by the UN said that global gross domestic product is forecast to shrink by 3.2 per cent in 2020, with only a gradual recovery of lost output projected for 2021.
  1. Cumulatively, the world economy is expected to lose nearly USD 8.5 trillion in output in 2020 and 2021, nearly wiping out the cumulative output gains of the previous four years.
  2. India’s economic growth is forecast to slow to 1.2 per cent in 2020, a further deterioration from the already slowed growth of 4.1 per cent in 2019.
  3. India, which grew at 6.8 per cent in fiscal year 2018, is forecast to recover slightly and clock a 5.5 per cent growth rate in 2021.
  4. The national lockdown in India, for example, is expected to depress economic growth to just 1.2 per cent, much lower than the already disappointing growth in 2019, the report said.
  5. The 2020 growth outlook for South Asia has deteriorated sharply. In light of this, the projected growth of GDP has been revised downward from 5.1 per cent to 0.6 per cent for 2020 and from 5.3 per cent to 4.4 per cent next year. Densely populated and ill-equipped for a public health catastrophe, the region is extremely at risk.
  6. The report noted that the policymakers across the South Asian region have, sometimes reluctantly, adopted more and more restrictions on activity to avert this threat, but this comes at a heavy economic toll.
  7. However, according to estimates in the report, India and China are the only two economies in the world that are not projected to shrink in 2020 even though their growth rates slow down considerably.
  8. While India could clock a 1.2 per cent GDP growth, China is estimated to record a 1.7 per cent growth rate. 
  9. All other economies in the world, including the US (-4.8 per cent), Japan (-4.2 per cent), European Union (-5.5 per cent) and the United Kingdom (-5.4 per cent) are projected to shrink this year.
  10. The report projected that GDP growth in developed countries will plunge to 5.0 per cent in 2020, while output of developing countries will shrink by 0.7 per cent.
  11. The pandemic has unleashed a health and economic crisis unprecedented in scope and magnitude. Lockdowns and the closing of national borders enforced by governments have paralysed economic activities across the board, laying off millions of workers worldwide, the report said.
  12. The pandemic will likely cause an estimated 34.3 million people to fall below the extreme poverty line in 2020, with 56 per cent of this increase occurring in African countries. 
  13. An additional 130 million people may join to the ranks of people living in extreme poverty by 2030, dealing a huge blow to global efforts for eradicating extreme poverty and hunger.
  14. The pandemic, which is disproportionately hurting low-skilled, low-wage jobs, while leaving higher-skilled jobs less affected will further widen income inequality within and between countries.