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How the Covid-19 pandemic has hit GDP development

The International Monetary Fund (IMF) launched its World Economic Outlook (WEO) report on Tuesday. The earlier WEO was launched in April this 12 months, when the extent of the Covid-19 pandemic and ts financial implications had been nonetheless being evaluated. The report offers the financial forecast on a bunch of indicators as much as 2025. While these numbers are topic to revision even within the short-term horizon, it’s value evaluating India’s post-pandemic financial trajectory with that of different South Asian international locations — Afghanistan, Bangladesh, Bhutan, and Pakistan — and with China, the one rising market economic system that’s greater than India.

India’s post-Covid losses the largest in South Asia

India’s GDP will contract by 10.3% this fiscal 12 months, IMF has projected. This is the largest contraction among the many international locations which have been chosen right here. Three different international locations, Afghanistan (5%), Pakistan (0.4%) and Sri Lanka (4.6%) will even expertise a contraction in GDP this 12 months. India will solely be the second nation aside from Afghanistan, which won’t be able to regain its 2019 GDP degree even in 2021.

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Investment to undergo a pointy fall

Investment as a share of GDP had been falling in India even earlier than the pandemic. This quantity had come down from 39.6% in 2011 to 29.7% in 2019. It is predicted to fall to 27.8% in 2020 and won’t cross the 31.7% degree of 2018 till 2025. To make certain, all international locations besides Bhutan, China and Myanmar will expertise a fall in investment-GDP ratios in 2020.  

Per capita GDP

While India’s per capita GDP (in present {dollars}) will fall beneath Bangladesh’s in 2020-21, it’s going to overtake it marginally as soon as once more in 2021-22. India’s per capita GDP is considerably lower than that of Bhutan and Sri Lanka within the South Asia area. With a dip in India’s per capita GDP trajectory, Bangladesh will take pleasure in nearly comparable per capita GDP ranges as India’s as much as 2025.

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