The International Monetary Fund (IMF) on Wednesday projected a contraction of 4.5 per cent for the Indian economy in 2020, a ‘historic low,’ citing the unprecedented COVID-19 that has brought almost all economic activities to a standstill.

IMF also said that the country is expected to bounce back in 2021 with a massive six per cent growth rate.

‘We are projecting a sharp contraction in 2020 of -4.5 per cent. Given the unprecedented nature of this crisis, as is the case for almost all countries, this projected contraction is a historic low,’ Indian-American Gita Gopinath, IMF’s Chief Economist, said as she released the World Economic Outlook Update.

The COVID-19 pandemic has had an adverse impact on the economy in the first half of 2020 than expected and the recovery is expected to be more gradual than previously forecast.

In 2021, global growth is projected at 5.4 per cent, the report said.

For the first time, all regions are projected to witness negative growth in 2020. In China, growth is projected at 1 per cent in 2020.

‘India’s economy is projected to contract by 4.5 per cent following a longer period of lockdown and slower recovery than anticipated in April,’ the IMF said, adding that it is the lowest ever for India since 1961.

In 2019, India’s growth rate was 4.2 per cent.

As many countries emerge from lockdowns hoping to resurrect their economies, the IMF warned that a potential second wave of infections could mean its already grim World Economic Outlook update underestimates the damage.

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