India's economy to contract by 5.9 percent in 2020 with 'permanent income loss'
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Dark days ahead
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, reported PTI.
"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.
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Permanent income loss
"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".
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.
No V-shaped recovery
"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 way ahead
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.