India To Grow At 5.1% in FY21 Due To Coronavirus: OECD
The agency claimed the outbreak will impact confidence, financial markets, travel sector and disrupt supply chains and will affect all the G20 economies in 2020
The global health epidemic coronavirus, or Covid-19, has negatively affected both the global and the Indian economy. According to the global agency Organisation for Economic Cooperation and Development’s (OECD) latest Interim Economic Outlook Forecasts, India’s growth forecast for the fiscal year starting April 1, 2020 is projected to drop from earlier 6.2 per cent to 5.1 per cent.
There is a drop of 110 basis points (bps) in the overall growth forecast for India.
The global economic growth is likely to fall to 2.4 per cent for the whole year, compared with an already weak 2.9 per cent in 2019. The economy is expected to revive to a modest 3.3 per cent in 2021.
China, which is the epicentre of the coronavirus outbreak, is most adversely affected by the virus. The revised growth prospects project a below 5 per cent growth for the economic giant this year as against 6.1 per cent in 2019.
Laurence Boone, chief economist at OECD said, “The virus risks giving a further blow to a global economy that was already weakened by trade and political tensions. Governments need to act immediately to contain the epidemic, support the health care system, protect people, shore up demand and provide a financial lifeline to households and businesses that are most affected.”
Government intervention required for revival
The report stressed the importance of government intervention for the revival of the global economy. Some of the measures suggested in the report are a strong healthcare system provided by the government, supportive monetary policies, a stronger pubic investment to enhance fiscal support and globally co-ordinated and more forceful actions to downsize the risk of the outbreak.
“Well-targeted economic policies are required to help support health care provision, and protect solvent companies and workers from experiencing significant temporary income disruptions because of the coronavirus outbreak,” said the report.
It added, “first and foremost, additional fiscal support for health services is required, including sufficient resources to ensure adequate staffing and testing facilities, and all necessary prevention, containment and mitigation measures.”