IMF slashes India's growth rate to 1.9% in 2020, forecasts global recession due to COVID-19
Washington: The IMF on Tuesday slashed India's projected GDP growth to 1.9 per cent in 2020 from 5.8 per cent in January, as the global economy hits the worst recession since the Great Depression in the 1930s due to the raging coronavirus pandemic that has nearly stalled all economic activities across the world.
With this subdued forecast, India is likely to record its worst growth performance since the 1991 liberalisation. But the International Monetary Fund, in its latest edition of the World Economy report, said India and China are the only two major countries, which will register a positive growth rate.
The IMF has projected a growth rate of 1.2 per cent for China in 2020 - the slowest in more than four decades.
However, the two Asian giants are likely to bounce back strongly in 2021 with India expected to grow at 7.4 per cent and China at 9.2 per cent.
"We project global growth in 2020 to fall to -3 per cent. This is a downgrade of 6.3 percentage points from January 2020, a major revision over a very short period," Indian-American Gita Gopinath, the IMF Chief Economist said, adding that the COVID-19 pandemic will severely impact growth across all regions.
The Great Depression was the worst worldwide economic downturn that lasted for 10 years from 1929, beginning in the US when the New York Stock Exchange on Wall Street crashed and wiped out millions of investors.
Most countries, in the advanced economy group, are forecast to contract this year, including the US ( 5.9 per cent), Japan ( 5.2 per cent), the United Kingdom ( 6.5 per cent), Germany ( 7.0 per cent), France ( 7.2 per cent), Italy ( 9.1 per cent), and Spain ( 8.0 per cent), the IMF report said.
Even with a sharp rebound in the remainder of the year and sizable fiscal support, the Chinese economy is projected to grow at a subdued 1.2 per cent in 2020.
The IMF said several economies in the region were forecast to grow at modest rates, including India (1.9 per cent) and Indonesia (0.5 per cent), and others are forecast to experience large contractions (Thailand, 6.7 per cent).
In January, IMF projected India's growth at 5.8 per cent in 2020 and 6.5 per cent in 2021.
On Tuesday, the IMF said that other regions are projected to experience severe slowdowns or outright contractions in economic activity, including Latin America ( 5.2 per cent) with Brazil's growth forecast at 5.3 per cent and Mexico's at 6.6 per cent; emerging and developing Europe ( 5.2 per cent) with Russia's economy projected to contract by 5.5 per cent.
The Middle East and Central Asia ( 2.8 per cent) with Saudi Arabia's growth forecast at 2.3 per cent, with non-oil GDP contracting by four per cent, and most economies, including Iran, expected to contract; and sub-Saharan Africa ( 1.6 per cent) with growth in Nigeria and South Africa expected at 3.4 per cent and 5.8 per cent respectively.
This is a crisis like no other, and there is substantial uncertainty about its impact on people's lives and livelihoods, Gopinath said.
A lot depends on the epidemiology of the virus, the effectiveness of containment measures, and the development of therapeutics and vaccines, all of which are hard to predict.
In addition, many countries now face multiple crises a health crisis, a financial crisis, and a collapse in commodity prices, which interact in complex ways, she said.
Assuming the pandemic fades in the second half of 2020 and that policy actions taken around the world are effective in preventing widespread firm bankruptcies, extended job losses, and system-wide financial strains, Gopinath said the IMF projects global growth in 2021 to rebound to 5.8 per cent.
This is a truly global crisis as no country is spared, Gopinath said.
Countries reliant on tourism, travel, hospitality, and entertainment for their growth are experiencing particularly large disruptions, she added.
The emerging markets and developing economies face additional challenges with unprecedented reversals in capital flows as global risk appetite wanes, and currency pressures, while coping with weaker health systems, and more limited fiscal space to provide support. Moreover, several economies entered this crisis in a vulnerable state with sluggish growth and high debt levels, the IMF chief economist wrote.
According to the World Economic Report, the rebound in 2021 depends critically on the pandemic fading in the second half of 2020, allowing containment efforts to be gradually scaled back and restoring consumer and investor confidence.
Significant economic policy actions have already been taken across the world, focused on accommodating public health care requirements, while limiting the amplification to economic activity and the financial system.
The projected recovery assumes that these policy actions are effective in preventing widespread firm bankruptcies, extended job losses, and system-wide financial strains, it said.
India is likely to record its worst growth performance since the 1991 liberalisation this fiscal year as the coronavirus outbreak severely disrupts the economy, the World Bank said on Sunday.
India's economy is expected to grow 1.5 per cent to 2.8 per cent in the 2020-21 fiscal which started on April 1, the World Bank said in its South Asia Economic Focus report. It estimated India will grow 4.8 per cent to 5 per cent in the 2019-20 fiscal that ended on March 31.
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Putin meets Iran's FM Araghchi, says Russia ready to do its best to help bring peace to West Asia
Moscow (PTI): Iran's Foreign Minister Abbas Araghchi on Monday met Russian President Vladimir Putin, who hailed the Iranian people for fighting bravely and heroically for their sovereignty and said Moscow is ready to do its best to help bring peace to West Asia as soon as possible.
Araghchi, who held talks with Omani and Pakistani leadership before arriving in Russia, met Putin in St. Petersburg and thanked him for supporting Iran, state-owned TASS news agency reported.
"Russia is ready to do everything in its power to ensure that peace in the Middle East is achieved as soon as possible," Putin said during his meeting with Araghchi, which was also attended by Russian Foreign Minister Sergey Lavrov.
Revealing that he received a message from Iranian Supreme Leader Mojtaba Khamenei last week, Putin asked Araghchi to convey his "gratitude for this message and best wishes for his health and well-being."
He praised the Iranian people for fighting "bravely and heroically" for their sovereignty, Iran's state-run PRESS TV reported.
"We really hope that, based on the courage and desire for independence, the Iranian people, under the guidance of the new leader, will weather this difficult period of trials and peace will come,” Putin said.
He also stressed that Russia “intends to maintain” its strategic relations with Iran.
Araghchi said that the world witnessed Iran’s strength in countering the US during the recent war, and that the Islamic Republic is a "stable and powerful establishment."
"With their courage, the Iranian people succeeded in resisting the US aggression and will be able to endure it,” he said.
He said that it became clear that Iran has “great friends and allies” like Russia, and conveyed “warmest greetings” from Supreme Leader Mojtaba Khamenei and President Masoud Pezeshkian to the Russian leader.
Araghchi said relations between Moscow and Tehran represent a “strategic partnership at the highest level” and will continue to develop "regardless of circumstances."
"We are grateful to you for the solid and strong positions in support of the Islamic Republic of Iran," he said.
Foreign Minister Lavrov said that the talks between President Putin and the Iranian Foreign Minister were "useful and constructive."
Kremlin Spokesman Dmitry Peskov later said that Russia is "ready to provide any good offices, any mediation services that are acceptable to the parties."
"We will be ready to do everything so that ultimately peace ensues, guaranteed peace, and that there is no return to hostilities," Peskov was quoted as saying by TASS.
He was asked how Moscow can assist in future negotiations on the Iranian settlement.
Araghchi arrived in Russia after his whirlwind trip to Islamabad, which, according to him, was “very productive” and involved “good consultations" with Pakistan's Army Chief Field Marshal Asim Munir, amid uncertainty over the second round of peace talks to resolve the war in West Asia.
"We held good consultations with our friends in Pakistan. The trip was successful. We assessed the outcome of our recent (meetings) and discussed in what direction and under what conditions talks can move on,” Araghchi said in a video posted on his Telegram channel upon his arrival in St Petersburg.
Referring to the second round of talks between the US and Iran to resolve the conflict in West Asia, Araghchi said: "Developments have taken place in the negotiations."
"Despite some progress in earlier rounds, the talks failed to reach their objectives due to the Americans' approach, the excessive demands they made, and the wrong approaches they adopted. Therefore, it was necessary to consult with our friends in Pakistan to review the latest situation,” Iran's official news agency IRNA quoted him as saying.
He said that the trip to Pakistan was a good opportunity to review developments related to the US-Israeli war against Iran, expressing confidence that “these consultations and coordination between the two countries will be highly significant.”
Araghchi arrived at St. Petersburg's Pulkovo Airport early Monday, where he was welcomed by Russian officials and Iran’s ambassador to Russia, Kazem Jalali, the report said.
The first round of peace talks between Iran and the US, held on April 11 and 12, failed to bring the desired result for the parties to the conflict.
The Iranian minister arrived in Islamabad for the second time on Sunday after a short visit to Oman, where he held talks with Sultan Haitham bin Tariq al-Said on security in the Strait of Hormuz and diplomatic efforts to end the Iran-US conflict.
After Araghchi left Pakistan for Oman on Saturday, President Donald Trump announced that US negotiators Steve Witkoff and Jared Kushner would no longer be going to Islamabad for talks with Iran, contending that Washington held all the cards on the matter.
Trump on Sunday reiterated that the US and Iranian officials can talk by phone for a peace solution to the conflict.
On Tuesday, Trump extended the two-week ceasefire with Iran indefinitely to give Tehran more time to prepare a unified proposal to end the war, just hours before the truce was set to expire.
The war began when the US and Israel jointly attacked Iran on February 28, killing Iranian Supreme Leader Ayatollah Ali Khamenei and several top commanders. The retaliation by the Islamic Republic extended the war to the entire Gulf region.
