As countries around the world are reeling under the devastating impact of the Covid-19 pandemic, the World bank on Thursday projected a 9.6% contraction for the Indian economy, steeper than the 3.2% estimated in June. Also Read – COVID Impacted Economy, May See Gradual Recovery: RBI Governor Shaktikanta Das
“The impact on livelihoods will even be larger than the GDP forecast suggests…This implies that the region will experience a sharp increase in the poverty rate,” the bank said in its half-yearly South Asia Focus update released on Thursday.
India, the region’s biggest economy, is likely to see its economy contract by 9.6% this year, the report added, noting that the country’s economic situation is “much worse” than ever seen before.
In the report, the World Bank said that the spread of the coronavirus and containment measures have severely disrupted supply and demand conditions in India.
Growth is expected to rebound to 5.4% in FY22, according to the World Bank estimate, which assumes COVID-related restrictions are completely lifted, but mostly reflecting base effects.
There was a 25 per cent decline in GDP in the second quarter of the year, which is the first quarter of the current fiscal year in India.
Spelling more trouble for South Asia, World Bank said that the region is set to plunge into its worst-ever recession with a sharper than an expected contraction of 7.7%.
