The second wave of the Covid-19 pandemic has set back the Indian economy severely, according to the International Monetary Fund’s (IMF) projections for the world economy released on Tuesday, which also forecast a split global recovery from the crisis, with access to coronavirus vaccines making the difference.
Advanced economies that have better access to Covid-19 vaccines are projected to recover faster and sooner than those struggling to inoculate their citizens, the IMF has suggested. Its report has upgraded projections for advanced economies and downgraded them for emerging and developing economies such as India.
“Growth prospects in India have been downgraded following the severe second Covid wave during March-May and expected slow recovery in confidence from that setback,” said the IMF’s July World Economic Outlook update.
From 12.5% growth that the IMF had projected for 2021 in a report in April – just as India was beginning to feel the brunt of the second wave – it slashed the estimate by three percentage points to 9.5% in the July update.
As the same time, the IMF upgraded the projection for 2022 by 1.6 percentage point from 6.9% to 8.5%.
India is not the only economy hit hard by the second wave. The IMF reported “similar dynamics” for Indonesia, Malaysia, the Philippines, Thailand and Vietnam – “where recent infection waves are causing a drag on activity”.
The IMF warned in the report that steady economic recovery around the world will continue to be impeded by “renewed waves”, citing India as an example.
On the subject of global recovery, the report said, “Vaccine access has emerged as the principal fault line along which the global recovery splits into two blocs: those that can look forward to further normalisation of activity later this year (almost all advanced economies) and those that will still face resurgent infections and rising Covid death tolls.”