IMF expects India's GDP to contract 4.5% in FY21, slashes FY22 growth forecast to 6%

International Monetary Fund (IMF) has predicted that Indian economy will contract 4.5 per cent during financial year 2020-21 on the back of extended coronavirus lockdown. This happens to be IMF's worst growth projection for India since 1961. Its earlier projection showed India's GDP growing at a 1.9 per cent. For FY22, the international organisation slashed India's growth forecast to 6 per cent from 7.4 per cent stated earlier.

"India's economy is projected to contract by 4.5 per cent following a longer period of lockdown and slower recovery than anticipated in April," IMF said in its World Economic Outlook Update for June 2020 on Wednesday.

IMF projected that global GDP will contract 4.9 per cent in 2020, bottoming out in second quarter of the year. In 2021, global growth is projected to 5.4 per cent, 0.4 percentage point lower than IMF's April forecast of 5.8 per cent.