Global Economic Prospects Report

In News

According to the Global Economic Prospects (GEP) report, the global and Indian economic output will expand in 2021-22.

In-Detail

According to the World Bank’s Global Economic Prospects Report (GEP), the global economic output is projected to grow by 4% in 2021.
But the projections are 5% below pre-pandemic levels.
For the fiscal year 2021-22, India is expected to grow at 5.4% and 5.2% for the fiscal year 2022-23.
For the fiscal year 2020-21, there was an expected contraction of 9.6%.
The contraction in India is mostly due to a sharp decline in household spending and private investment.
According to the GEP report, in the informal sector, there was severe income loss which accounts for 4/5ths of employment.
But there is a momentum of recovery in the manufacturing and service sectors.
In 2021, the rebound from the low base will be countered by the subdued private investment growth due to financial sector weakness.
With the resurgence of the coronavirus, the global recovery has been dampened.
But this is expected to strengthen the trade and consumption supported by the vaccination.
After the 3.6% contraction in 2020, the GDP of the US is expected to grow at 3.5% and the Euro at 3.6% in 2021.
In 2021-22, the EMDEs, the Emergency Market, and Developing Economies are expected to grow at an average of 4.6%.
This reflects the above-average rebound of China which is expected at 7.9% and 5.2% in 2020 and 2021.
The key elements to strengthen the economic recovery will be the change in the economic environment and the ability to reduce inequality.
The inequality of downturn is due to the lowest incomes and would take a long term to regain the jobs, vaccines, healthcare in the post-COVID-19 economy.
The global debt levels increased massively due to the pandemic.
The EMDE government debt is expected to increase by 17% points of GDP and the service sector’s output contracts over 9%.
The immediate priorities of policymakers are to balance the risks from the large and increasing debt loads with the risks of slowing the economy.
In 2020 due to the pandemic, the South Asian region’s economy is expected to contract by 6.7%.
As per the GEP report, India’s deep recession is due to the non-bank financial corporations.
In South Asia, growth is expected to be 3.3% in 2021 and 3.8% in 2022.
As per the report, downside risks predominate the growth and include financial distress caused by tightening, corporate bankruptcies, unexpected low recoveries across sectors, weather, and climate changes.
Apart from their pandemic, Central Banks in EMDs have deployed asset purchase programs and will help to stabilize financial markets.