Accordingly three major global economic institutions international Monetary Fund (IMF), United Nations Conference on Trade and Development (UNCTAD) and World bank have warned that financial consequences of the Covid-19 pandemic will be worse than feared. IMF has projected that the pandemic would dent the global economy more than expected in 2020, followed by a dull recovery in 2021. According to its latest edition of the World Economic Outlook, global Gross Domestic Product (GDP) will shrink to 5 per cent in 2020, nearly 2 per cent lower than its april estimate.
IMF has drastically revised its estimates for the indian economy too. In april, it had projected that the indian economy would grow at 1.9 per cent, but the latest estimate on june 24 said it would shrink to 4.5 per cent. "India's economy is projected to contract by 4.5 per cent following a long period of lockdown and slower recovery than anticipated in april," the IMF predicted.
Around 5,000 major global firms, which account for nearly half of the world's FDI, expect their earnings to drop by 40 per cent on an average. This would lead to reduction in up to 40 per cent FDI in 2020 from their 2019 value of $1.54 trillion, UNCTAD said in its latest World Investment Report 2020. This would bring FDI below $1 trillion for the first time since 2005. World bank has projected that global economy would slump to -5.2 per cent this year, a significant drop of 7.7 percentage points than its january 2020 estimate. "Our baseline forecast envisions the deepest global recession since World war II," World bank president David Malpass had said about their assessment of the global economy.
