GS-2: Important International institutions, agencies and fora- their structure, mandate.
IMF and World Economic Outlook
Context: Recently, IMF unveiled its 2nd World Economic Outlook (WEO). The IMO comes out with the report twice every year — April and October — and also provides regular “updates” to it on other occasions.
Main takeaways from the report
The central message was that the global economic recovery momentum had weakened due to pandemic induced disruptions. However, it is the increasing inequality among nations that IMF was most concerned about.
Aggregate output for the advanced economy group is expected to regain its pre-pandemic level in 2022 while that of developing economy group (excluding China) is expected to remain 5.5 per cent below the pre-pandemic forecast in 2024.
There are two key reasons for the economic divergences: large disparities in vaccine access, and differences in policy support.
The report also points out that the employment growth likely to lag the output recovery. Employment around the world remains below its pre-pandemic levels, due to negative output gaps, worker fears of infection, automation in some sectors, unemployment benefits helping to cushion income losses.
India
As far as GDP is concerned, India’s growth rate hasn’t been revised downwards.
However, the IMF has projected on employment — that the recovery in unemployment is lagging the recovery in output (or GDP)
Lack of adequate employment levels would drag down overall demand and thus stifle India’s growth momentum.
Also, India is witnessing a K-shaped recovery. That means different sectors are recovering at significantly different rates. Some sectors such as the IT-services sectors have been practically unaffected by Covid, while e-commerce industry is doing “brilliantly”.
Also, the informal economy is struggling to recover at the same pace as some of the more visible sectors.
Do You Know?
According to the data available with the Centre for Monitoring Indian Economy (CMIE), the total number of employed people in the Indian economy as of May-August 2021 was 394 million — 11 million below the level set in May-August 2019.
In May-August 2016 the number of employed people was 408 million. In other words, India was already facing a deep employment crisis before the Covid crisis, and it became much worse after it.
