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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India, Ethiopia elevate ties to strategic partnership as PM Modi holds talks with his counterpart
Addis Ababa (PTI): India and Ethiopia on Tuesday elevated their historical ties to a strategic partnership, as Prime Minister Narendra Modi held wide-ranging talks with his Ethiopian counterpart Abiy Ahmed Ali during which they discussed issues of bilateral and mutual interest.
Modi, who arrived here from Jordan on his maiden bilateral visit, was accorded a ceremonial welcome at the National Palace ahead of the bilateral talks, reflecting the vibrant India-Ethiopia relations rooted in shared history and a promising future.
"We are elevating India and Ethiopia relations to a strategic partnership. This step will provide new energy, new momentum and new depth to our ties," Prime Minister Modi said during the delegation-level talks.
He thanked PM Ali for his support in India's fight against terrorism. "The support of friendly countries in this struggle against terrorism holds great significance," Modi said.
"Today, we got the opportunity to deliberate on the key aspects of our cooperation, such as economy, innovation, technology, defence, health, capacity-building and multilateral cooperation. I am pleased that today, we have decided to double the student scholarship for Ethiopia in India," Modi said.
Modi said that India and Ethiopia have shared contact, dialogue, and exchange for thousands of years. The two countries, which are rich in languages and traditions, are symbols of unity in diversity, he added.
"Both countries are democratic powers committed to peace and the welfare of humanity. We are co-travellers and partners of the Global South. On international platforms, we have stood shoulder-to-shoulder," he said.
The two sides signed eight MoUs/agreements, including upgrading ties to 'Strategic Partnership', customs cooperation, establishing data center at the Ethiopian Foreign Ministry, UN Peacekeeping training cooperation, debt restructuring under G20, more ICCR scholarships and AI short courses for Ethiopians, and support for maternal and neonatal healthcare.
Modi said the African Union's headquarters in Ethiopia makes the country a meeting point of African diplomacy. "Inspired by the common vision of an inclusive world, in 2023, India ensured that the African Union became a G20 member," he said.
In 2023, during India’s G20 Presidency, the African Union was admitted as a permanent member of the G20.
Modi said that though this is his first visit, he felt a deep sense of belonging and warmth, reflecting the thousands of years of connection between the two countries.
On his part, Prime Minister Ali said the two countries share over thousands of years of connection through trade, diplomacy, education, culture and even in our food and traditions. "These ties continue to shape a deep friendship, collaboration and mutual respect between our people," he said.
"We also appreciate your consistent message that Africa's priorities must lead the partnership. These kinds of dignified, respectful messages for Africa are very important. Mr Prime Minister, keep pushing. That is the type of message we are expecting from all our trusted friends," Ali said.
He said this aligned fully with Ethiopia's development plan - African-owned, African-led, and African-defined.
"Today, we meet with a clear focus to shape a modern partnership, grounded in sovereignty, self-reliance and practical cooperation. Our cooperation is rooted in equality and South-South solidarity," he said.
"Our economy is performing strongly. Last year, we grew 9.2% and this year we are expecting 10.3% GDP growth. Besides GDP growth, our FDI inflow is also rising big time. India is the leading source for our FDI," he said.
"We have more than 615 Indian companies which are investing in Ethiopia. This all gives our cooperation a strong foundation of trust. I think our decision today that we elevate our historic relationship to a strategic relationship is the right decision," he added.
Ethiopia also conferred its highest award - The Great Honour Nishan of Ethiopia - on PM Modi. He is the first global head of state to receive this award.
Prime Minister Modi also went to the Friendship Park and Friendship Square in Addis Ababa with PM Ali.
In a warm and special gesture, PM Modi was earlier received by his Ethiopian counterpart at the airport and accorded a warm and colourful welcome.
"Ethiopia is a nation with great history and vibrant culture," Modi said.
PM Ali informed his Indian counterpart about the varieties of Ethiopian coffee during informal talks.
"At Addis Ababa airport, took part in a traditional Coffee Ceremony with Prime Minister Abiy Ahmed Ali. The ceremony beautifully highlights Ethiopia’s rich heritage," Modi said.
In a unique gesture, the Ethiopian Prime Minister drove Modi to the hotel.
On the way, he took a special initiative of taking PM Modi to the Science Museum and Friendship Park, which was not in the itinerary.
"Gratitude to Prime Minister Abiy Ahmed Ali for showing me glimpses of Ethiopian history and culture at the National Palace Museum in Addis Ababa. It was a powerful reminder of Ethiopia’s rich traditions," Modi said in a post on X.
The Nobel Peace Prize-winning Ethiopian PM’s special gestures show remarkable respect for Modi, sources said.
"Thank you Ethiopia for a welcome that was unforgettable. The Indian community showed remarkable warmth and affection. India-Ethiopia friendship is going to get even more robust in the times to come," Modi said.
When Modi arrived at the hotel, he was warmly welcomed by the members of the Indian community. Local artists performed dances. Some of them danced on the theme of the popular Hindi song 'Aisa Des Hai Mera' to welcome him.
On Wednesday, Modi will address the Joint Session of Parliament and share his thoughts on India's journey as the "Mother of Democracy" and the value that the India-Ethiopia partnership can bring to the Global South.
PM Modi arrived in Ethiopia from Jordan, where he held a one-on-one meeting with King Abdullah II at the Husseiniya Palace on Monday before the delegation-level talks.
India and Jordan also inked MoUs in the fields of culture, renewable energy, water management, digital public infrastructure and twinning arrangement between Petra and Ellora, aimed at giving a major boost to bilateral ties and friendship.
From Ethiopia, Modi will visit Oman on the final leg of this three-nation tour.
