Brain Booster for UPSC & State PCS Examination (Topic: Global Economic Prospects June 2020)

Brain Booster for UPSC & State PCS Examination

Global Economic Prospects June 2020

'Global Economic Prospects' is a report published by World Bank twice a year in January and June. It reflects the state of global economy with special focus of emerging and developing economies.

The global economy is expected to shrink 5.2% in 2020.
Owing to the worldwide COVID-19 outbreak, advanced economies will see growth falling 7% in 2020, while emerging economies as a group, which includes India, will see a growth decline of 2.5% this year.
Growth is forecasted to decline 7.2 per cent in Latin America and the Caribbean, 4.7 per cent in Europe and Central Asia, 4.2 per cent in the Middle East and North Africa, 2.8 per cent in sub-Saharan Africa (the deepest on record), 2.7 per cent in South Asia and 0.5 per cent in East Asia and the Pacific (the lowest rate since 1967).
The United States economy is forecast to contract 6.1 per cent this year, while euro zone output is expected to shrink around 9.1 per cent. Japan's economy is anticipated to retreat 6.1 per cent.
Current estimates show that 60 million people could be pushed into extreme poverty in 2020 (and) these estimates are likely to rise further.
Demand for metals and transport-related commodities such as rubber and platinum used for vehicle parts has also tumbled.
While agriculture markets are well supplied globally, trade restrictions and supply chain disruptions could yet raise food security issues in some places.

GDP in the region is projected to contract by 2.7% in 2020 as pandemic mitigation measures hinder consumption and services and uncertainty about the course of the pandemic chill private investment.
In India, growth is estimated to have slowed to 4.2% in FY 2019/20, which ended in March 2020. Output is projected to contract by 3.2% in FY 2020/21.
The International Monetary Fund has slashed its 2010-21 growth projection for India to 1.9% from 5.8% estimated in January. Barclays said it saw 0% growth, while the World Bank cut India's growth forecast to 1.5-2.8% from 6.1% earlier.
Pakistan (-2.6% in FY 2019/20) and Afghanistan (-5.5% in 2020) are both projected to experience contractions, as mitigation measures are anticipated to weigh heavily on private consumption. Key labour-intensive export sectors are expected to contract sharply and recover only slowly.
Growth in Bangladesh (1.6% in FY 2019/20) and Nepal (1.8% in FY 2019/20) is expected to decelerate markedly in 2020 due to pandemicrelated disruptions including mitigation measures and sharp falls in exports and remittance inflows. Nepal and Maldives will be hard hit by a drop in tourism.

In the face of this disquieting outlook, the immediate priority for policymakers is to address the health crisis and contain the short-term economic damage. Over the longer term, authorities need to undertake comprehensive reform programs to improve the fundamental drivers of economic growth once the crisis lifts.
Policies to rebuild both in the short and long-term entail strengthening health services and putting in place targeted stimulus measures to help reignite growth.
Low oil prices are likely to provide, at best, temporary initial support to growth once restrictions to economic activity are lifted Low oil prices offer an opportunity to oil producers to diversify their economies. In addition, the recent oil price plunge may provide further momentum to undertake energy subsidy reforms and deepen them once the immediate health crisis subsides.