IMF reported eye opening GDP figures, as due to the Covid19 outbreak impact, India’s per capita GDP is about to fall below Bangladesh in 2020 (calendar year).
The report recorded that India’s per capita GDP (in dollar terms, at current prices) falling to $1,877 in 2020, a decline of 10.3 percent. For Bangladesh, the corresponding figure is seen growing to $1,888, a rise of 4 percent. However, till a few years ago India was above Bangladesh still the gap has been considerably closed owing to the country’s rapidly-rising exports. Apart from this in the course of the intervening period, India’s savings and investments remained tepid, the corresponding numbers for Bangladesh saw a sizeable flow.
In such condition IMF’s forecast hits the mark, that will eventually leave India ahead of Pakistan and Nepal in the regional GDP sweepstakes, while countries in South Asia — Bhutan, Sri Lanka, Maldives, and of course Bangladesh — will be ahead of India. Also, the report concluded according to the degrowth projection for India, the economies of Nepal and Bhutan are expected to grow this year.
Not only that, IMF’s forecast for India is worse than RBI’s projection of 9.5% contraction for the full fiscal. It is also despondent than the forecast of the World Bank which predicted a decline of 9.6% for FY21.
And the World Bank highlighted that the situation in India is “worse than ever”.
Moreover, IMF’s report stated that India’s contraction of 10.3% is going to be the third sharpest fall in the world after Spain and Italy, which will be the sharpest decline among developing nations and emerging economies. Emerging economies other than China will witness a 5.7 percent contraction in 2020. This is worse than the 5.0 percent projected in June. By seeing this IMF is expecting a sharp recovery for India in 2021, which will get India ahead of Bangladesh once again in per capita GDP.
As specifically, the report flagged risks emanating from the unabated spread of the virus in countries such as India and Indonesia. These economies are far more reliant on worst-hit sectors like tourism and commodities as also on remittances and other sources of external finance, which IMF said would make recovery much tougher for them.