Published: Sat, October 17, 2020
Economy | By

Bangladesh will better India in per capita GDP in 2020, says International Monetary Fund

Bangladesh will better India in per capita GDP in 2020, says International Monetary Fund

It also said that the Indian economy is projected to contract by 10.3 per cent this year due to impact of COVID-19 but will rebound with 8.8 per cent growth the following year and regain its position as the fastest-growing emerging economy.

"The pandemic will reverse the progress made since the 1990s in reducing global poverty and will increase inequality", the International Monetary Fund wrote in its bi-annual World Economic Outlook report. In the last 5-6 years, however, India has raised tariffs in 3,200 of 5,300 product categories. Three other countries, Afghanistan (5%), Pakistan (0.4%) and Sri Lanka (4.6%) will also experience a contraction in GDP this year. China is expected to grow by 1.9 percent, the only major economy that could see growth this year.

Despite the promising outlook, the International Monetary Fund official urged China to strengthen its social safety net, which has been strained by the COVID-19. Bangladesh per capita GDP, on the other hand, is expected to grow to $1,888 from its current $1855. Growth is projected to rise to 4.4 per cent in the fiscal year 2020-21.

The minister pointed out that Egypt is the only country in the Middle East and Africa that has preserved the confidence of all three global rating institutions: "Standard & Poor's", "Moody's" and "Fitch" during one of the most hard periods in the global economy in light of the coronavirus pandemic.

The five nations with the highest Covid-19 death counts - US, Brazil, India, Mexico and United Kingdom - are forecast to suffer a total GDP decline of almost $1.8 trillion in nominal terms and $2.1 trillion after having been adjusted for differences in purchasing power.

The report says that for many emerging market and developing economies excluding China, prospects continue to remain precarious. "Following a V-shaped rebound in Q2, led by the manufacturing sector, growth sustained momentum in Q3 as the services sector caught up".

"Pent-up demand boosted domestic tourism, supporting the catering and accommodation sectors".

The IMF's latest report said that global trade began recovering in June as lockdowns were eased, with China being an important contributor. Support should shift gradually from protecting old jobs to getting people back to work for example, by reducing job retention programs (wage subsidies), reintroducing job search requirements, and training new skills and helping viable but still-vulnerable firms safely reopen.

The IMF said lower growth next year was partly a result of the shallower trough for economies this year and "consistent with expectations of persistent social distancing".

He affirmed that the government will continue implementing an integrated package of structural reforms to strengthen the macroeconomic structure, in a way that contributes to achieving economic targets by registering a primary surplus and raising economic growth rates, in a manner that helps preserve economic gains. Second, even after five years, India's economic growth is unlikely to catch up with the pace of Bangladesh, which means the continuation of the troubles in the near future too.

While the considerable global fiscal support of close to 12 trillion dollars and the extensive rate cuts, liquidity injections, and asset purchases by central banks helped saved lives and livelihoods and prevented a financial catastrophe, Gopinath noted that there is still much that needs to be done to ensure a sustained recovery.

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