The global economy seems headed for a severe recession and parallels are being drawn with the global financial crisis of 2008 and the slowdown brought about in 2020 by the Covid-19 pandemic. A lot of hope that any serious setback can be averted rests on a high degree of fine tuning of policy which may be difficult to deliver. In fact, a majority of bets right now are on a serious slowdown being ahead without any clear indication of how its blow can be softened.
Perhaps, the only silver lining for a country like India and developing countries in general is that the slowdown for them will not be as severe as that for the developed world.
According to the International Monetary Fund’s latest World Economic Outlook, India’s growth rate in 2022 will be down to 6.8 per cent from last year’s 8.7 per cent and projected to go down further to 6.1 per cent next year.
Against this, the US economic growth is likely to fall this year precipitously to 1.6 per cent from 5.7 per cent last year and set to go down further to a mere 1 per cent next year. Absolutely, the worst off is the Euro area and, in particularly, Germany, which is set to see a negative growth, that is its economy will contract by 0.3 per cent next year from the current year’s 1.5 per cent, which itself is down from last year’s 2.6 per cent.