World Economic Outlook is a report published by the International Monetary Fund twice a year. The analyses entailing global economic development is shared through this report. The report is important for the IAS Exam preparation, as recently due to the COVID-19 pandemic, the world economy has been severely affected and the World Economic Report 2020 reflected upon the economic growth projections going forward.
Aspirants can read about the International Monetary Fund (IMF) in the linked article.
World Economic Outlook Report 2020
The IMF published the recent edition of the World Economic Outlook in October 2020 after the earlier release in April 2020. Both the reports mostly focused on the impact of coronavirus-led economic slowdown and future growth prospects.
Get all important reports published by international organizations in the linked article.
COVID-19 & World Economic Outlook Projections
The key findings of the World Economic Outlook in October 2020 are:
- A deep recession in 2020 – The report mentioned a projection of less severe yet deep recession in the year 2020 due to the slowdown in economic activities across the globe due to lockdown.
- The key factors that led to rapid recovery in the economy and avoided a financial catastrophe are:
- Sizable, swift, and unprecedented fiscal, monetary, and regulatory responses.
- Maintenance of disposable income for households
- Protection of cash flows for firms
- Support of credit provisions
- The report suggests that emerging markets and developing economies are still unsecured due to the following reasons:
- The pandemic continues to spread in these areas
- The health systems in these areas are being overwhelmed with the rising number of cases.
- Sectors like tourism are severely affected which are important in the growth of the economy.
- Emerging markets and developing countries are also dependent on external finance including remittances.
- Due to covid-19 crisis, there has been a disruption in both supply and demand in the global economy.
- Some of the reasons for supply disruptions are:
- Infections following coronavirus
- Reduction in labour supply
- Business closures
- Social distancing
- Some of the reasons for demand disruptions are:
- Loss of income arising from unemployment, the morbidity of quarantines.
- The report also mentions that around 90 million people are expected to fall into extreme deprivation in 2020.
- Global Growth is projected at -4.4 percent (against an earlier projection of -5.2 percent.)
- The growth projection in 2021 is 5.2 percent.
- The report also predicted that the output in advanced and emerging economies will remain below 2019 levels, with an exception of China.
- Manufacturing-led economies recover better than the economies that rely on contact-intensive services and oil export.
- Uneven recoveries between advanced economies and developing economies are projected in 2020.
- The report also mentions the severe setback to the improvements in standards of living. It states, “The cumulative loss in output relative to the pre-pandemic projected path is projected to grow from 11 trillion over 2020-21 to 28 trillion over 2020-25.”
The World Economic Outlook report called for multiple ways to strengthen the economy amid an economic slowdown. It proposed the following actions:
- Greater International Collaboration – The need for countries to work together in the time of pandemic can help in faster economic growth.
- The need to limit persistent economic damage – It proposed the governments should continue income support through targeted cash transfers, wage subsidies, and unemployment insurance.
- Design of policies that promote strong, sustainable and equitable economic growth.
World Economic Outlook Report 2020 & India
The important points to be noted w.r.t India’s economic growth as predicted by the IMF’s World Economic Outlook Report are:
- Industrial production in India has been severely hit amid economic slowdown followed by the COVID-19 crisis.
- The IMF’s World Economic Report of October 2020 mentions that India will be worst affected in both the short and long term.
- IMF’s WEO proposed that Bangladesh’s per capita income is expected to be higher than India’s in 2020.
- It projected the growth rate of 8.8 percent in 2021. The IMF stated, “The economy is projected to contract by 10.3 per cent in 2020.”
World Economic Outlook and Global Growth Projections 2020-21
The growth projections of a few advanced economies and emerging and developing economies, as mentioned by IMF’s WEO are given in the table below:
World Economic Outlook – October 2020 Projections
|Advanced Economies||Growth Rate (Red GDP, Annual %) – 2020|
|World Economic Outlook – October 2020 Projections|
|Emerging Markets & Developing Economies||Growth Rate (Red GDP, Annual %) – 2020|
Aspirants should note down the estimates proposed by the international organisations as these are helpful for UPSC Mains answer writings. The IMF’s World Economic Outlook report findings can be useful for UPSC Mains GS 2, GS 3 and essay papers.