Amid COVID-19 impact, Indian economy forecast to contract 5.4% in 2020: UN
United Nations: Impacted by disruptions caused by the COVID-19 pandemic, India's economy is forecast to contract by 5.9 per cent in 2020, the UN has said in a report, warning that while growth will rebound next year, the contraction is likely to translate into a permanent income loss.
The Trade and Development Report 2020 by UN Conference on Trade and Development (UNCTAD) said on Tuesday that the world economy is experiencing a deep recession amid a still-unchecked pandemic.
It said the global economy will contract by an estimated 4.3 per cent this year, leaving global output by year's end over USD 6 trillion short (in current US dollars) of what economists had expected it to be before the coronavirus began to spread.
"In short, the world is grappling with the equivalent of a complete wipeout of the Brazilian, Indian and Mexican economies. And as domestic activity contracts, so goes the international economy; trade will shrink by around one-fifth this year, foreign direct investment flows by up to 40 per cent and remittances will drop by over USD 100 billion," the UNCTAD report said, painting a grim picture of the global economic scenario.
UNCTAD expects South Asia to contract 4.8 per cent in 2020 and recover to 3.9 per cent in 2021. India's GDP is forecast to contract 5.9 per cent in 2020 and recover to 3.9 per cent next year, the report said.
"In the case of India, the baseline scenario is a sharp recession in 2020 as strict lockdown measures to stem the virus' spread brought many productive activities to a halt across the country," it said.
The report said that while UNCTAD expects a rebound in India's GDP growth in 2021 in line with the growth rates of the Indian economy in recent years, "the contraction registered in 2020 is likely to translate into a permanent income loss".
In the US, UNCTAD expects GDP to fall 5.4 per cent in 2020 and recover 2.8 per cent in 2021. China is expected to register an economic growth of 1.3 per cent this year and a whopping 8.1 per cent in 2021, the report said, recording the highest economic growth rate in the world.
"This year is shaping up to be a very difficult year for the global economy. With many countries unprepared to respond to a health pandemic, lockdown seemed to be the only plausible way to protect lives and preserve health systems. Doing so triggered an economic crisis that spread as quickly as the virus itself," the UN trade agency added.
Data for the first two quarters of this year show output contracted more sharply than in 2008-2009, and in some cases registering the steepest drop on record.
Estimates for the year point to a generalised global recession matching the Great Depression of the 1930s, it said.
While 2021 will likely see a rebound, it will be uneven within and across countries and uncertainty will persist, the report said, warning that unemployment will be on an upward trend, more and more companies will be facing the threat of bankruptcy; supply chains will be fragile; confidence will be shaken and demand will be weak.
"Debt levels across the world, in both the public and private sectors, will have risen significantly from the historically high levels registered before the crisis. In this condition, the wrong policy steps and ignoring the experience of the last decade could trigger further shocks which would not only derail recovery but could usher in a lost decade," the report said.
It said that the biggest absolute falls in output will be in the developed world, with some countries set to register a double-digit decline over the year.
"But the greatest economic and social damage will be in the developing world, where levels of informality are high, commodities and tourism major sources of foreign exchange, and fiscal space has been squeezed under a mountain of debt," it said.
Between 90 million and 120 million people will be pushed into extreme poverty in the developing world, with close to 300 million facing food insecurity, it said.
UNCTAD Secretary-General Mukhisa Kituyi said building a better world require smart actions.
"The lives of future generations, indeed of the planet itself, will depend on the choices we all take over the coming months, Kituyi said.
The report also said that even if economic activity continues to bounce back and advanced country governments continue with the current mix of fiscal and monetary measures, employment will not fully recover, and many countries will remain in debt distress and income gaps will widen.
"Forecasters' talk of a V-shaped recovery can easily mislead. Such a recovery would require double-digit global growth next year, which is out of the question, said Richard Kozul-Wright, UNCTAD's director of the division on globalisation and development strategies.
The report asserted that a global recovery plan must be both bold and comprehensive, built around a coordinated macroeconomic expansion focused on job creation and higher wages and supported by a big public investment push into cleaner energy, environmental protection, sustainable transport systems and the care economy.
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Killing of Khamenei cynical violation of human morality, international law: Putin
Moscow (PTI): The killing of Iran's Supreme Leader Ayatollah Ali Khamenei was a cynical violation of all norms of human morality and international law, Russian President Vladimir Putin declared in his message to his Tehranian counterpart, the Kremlin said Sunday.
Khamenei was killed in an airstrike in Tehran on Saturday during a joint Israel-US attack on Iran.
“Please accept my deepest condolences in connection with the assassination of the Supreme Leader of the Islamic Republic of Iran, Seyyed Ali Khamenei, and members of his family, committed in a cynical violation of all norms of human morality and international law,” Putin said in his condolence message.
Putin's condolence message to Iranian President Masoud Pezeshkian was published on the Kremlin portal.
Earlier on Saturday, Russia condemned the US-Israeli joint strikes on Iran qualifying it as an “unprovoked” aggression against a sovereign state in violation of international law and called for immediate return to diplomacy.
The Russian Foreign Ministry also described the US and Israeli forces' strikes against the Iranian territory as “a pre-planned” act of aggression against an independent UN member state.
Putin also conducted an emergency meeting of the National Security Council online on Saturday to discuss the emerging situation following the US-Israeli strikes and Iran’s retaliation.
Meanwhile, according to reports more than 2,00,000 Russians are stuck in the region due to closure of their airspaces by Iran and Gulf countries.
The situation in the Middle East and the airport closures have affected not only organised tourists from Russia registered with tour operators, but also those travelling on business trips and independently, state-run TASS news agency reported.
“Approximately 2,00,000 people are unable to leave the UAE or return from vacations in the Maldives and other countries,” Alexey Volkov, president of the National Union of Hospitality Industry, told TASS.
UAE and its airports have become a main hub of access to Russia since the Ukraine conflict and closure of EU air space for civilian air traffic under sanction on Moscow.
“The situation remains complex and unpredictable: drone and missile strikes have hit key tourist locations in the UAE, including its most famous hotels.
“And then there are those who aren't counted as tourists at all, but are travelling around the world for business—the Middle East, for example, is currently a major business hub, home to a significant amount of Russian capital, investment, and business,” Volkov said.
