Economy Projected For Stronger Recovery In 2021, Grow By 5%: UN Report

India is estimated to contract by 6.9 per cent in 2020 and then forecast to record a 5 per cent GDP growth in 2021, the report said.

The economy, estimated to contract by 6.9 per cent in 2020 due to the coronavirus pandemic, is forecast to record a "stronger recovery" in 2021 and grow by 5 per cent, according to a UN report which said the country's current fiscal year budget points to a shift towards demand-side stimulus, with an uptick in public investment. The report, ''Out of the frying pan …Into the fire?'' published Thursday as an update to the Trade and Development Report 2020 by UN Conference on Trade and Development (UNCTAD) said the global economy is set to grow by 4.7 per cent this year, faster than the 4.3 per cent predicted in September 2020, thanks in part to a stronger recovery in the US, where progress in distributing vaccines and a fresh fiscal stimulus of USD 1.9 trillion are expected to boost consumer spending. The report described the year 2020 as “Annus horribilis” saying although warnings about the spread of viruses have become more frequent in recent years, “nobody anticipated the arrival of COVID-19 or its dramatic global impact.” India is estimated to contract by 6.9 per cent in 2020 and then forecast to record a 5 per cent GDP growth in 2021, the report said. The September 2020 report by UNCTAD had said that India's economy was forecast to contract by 5.9 per cent in 2020 and recover to 3.9 per cent in 2021. “India's growth performance in 2020 fell below our mid-2020 expectations. Actual fiscal stimulus fell short of initial announcements that suggested a large increase of public spending for pandemic relief,” UNCTAD said. The UN agency added that the relief measures adopted by India “were not only much smaller in scale, but also centred on easing supply-side constraints and providing liquidity support rather than aggregate demand support. “Moreover, restrictions to people's movement not only severely affected incomes and consumption, they also proved largely unsuccessful in containing the spread of the virus. As a result, the fall in economic activity proved to be larger than we had envisaged in mid-2020,” it said. The report noted that the deeper-than-expected downturn in 2020 explains in part the stronger recovery now projected for 2021 for India.