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India's economy to contract 5.9% in 2020: UNCTAD
Sep-23-2020

The United Nations Conference on Trade and Development (UNCTAD), in its report for 2020, titled From Global Pandemic To Prosperity for All: Avoiding Another Lost Decade, has projected India’s economy to contract 5.9% in 2020, and warned the country to not repeat its past mistake of announcing austerity measures. However, it forecast the economy to grow 3.9% next year. It said in the case of India, the baseline scenario is a sharp recession in 2020 as strict lockdown measures to stem the virus’s spread brought many productive activities to a halt across the country.

It said ‘although we expect a rebound 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.’ However, these numbers are based on constant dollars with 2015 as base year and hence exchange rates might have played an important role in these estimations.

India was not projected as the fastest-contracting economy as the UK, France, Italy, South Africa, Mexico, Argentina and Brazil were forecast to witness more shrinking growth rates in the current calendar year. In fact the GDP of Argentina and Mexico is pegged to fall in double digits this year. However, it expected India to witness the steepest contraction in Asia in 2020. It warned against expenditure compressing measures which countries such as India, Mexico, Brazil, Argentina and South Africa have implemented in the past. Besides, it said among G20 countries, Argentina, Brazil, India, Mexico and South Africa have all implemented austerity in the past years but are now struggling to access reliable sources of finance.

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