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International Monetary Fund (IMF) has said that India's economy, which contracted by 7.3 percent due to the COVID-19 pandemic, is expected to grow by 9.5 percent in 2021 and 8.5 percent in 2022. India's growth projection released by the latest World Economic Outlook (WEO) remains unchanged from its previous WEO update of July this summer but is a three-percentage point in 2021 and 1.6 percentage point drop from its April projections. According to the latest WEO update, released ahead of the annual meeting of the IMF and the World Bank, the world is expected to grow at 5.9 per cent in 2021 and 4.9 per cent in 2022.

Gita Gopinath, Chief Economist of the IMF, said that compared to their July forecast, the global growth projection for 2021 has been revised down marginally to 5.9 percent and is unchanged for 2022 at 4.9 percent. However, this modest headline revision masks large downgrades for some countries. She said the outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics. She also said the downgrade also reflects more difficult near-term prospects for the advanced economy group, in part due to supply disruptions.

Gopinath further said that partially offsetting these changes, projections for some commodity exporters have been upgraded on the back of rising commodity prices. Pandemic-related disruptions to contact-intensive sectors have caused the labour market recovery to significantly lag the output recovery in most countries. Observing that the dangerous divergence in economic prospects across countries remains a major concern, she said aggregate output for the advanced economy group is expected to regain its pre-pandemic trend path in 2022 and exceed it by 0.9 per cent in 2024.