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REVIEW & PROSPECTS OF ECONOMY
1.1 Global Economy
A year and a half ago the world was engulfed in a crisis that caused unprecedented contraction
of economic activity, loss of lives and livelihoods and an array of issues that the world is still
grappling with. The handling of the crisis by Central Banks and Governments was, however,
very swift with included liquidity support measures and fiscal safety nets. The outlook for
the world now is highly dependent on how aggressively countries resort to vaccination and
how successful in turn these drives will be in containing the infections. In addition, the active
deployment of fiscal and monetary policies by countries will decide the pace of recovery.
The year 2020 was marked by heightened uncertainty and gloominess as COVID-19 struck
the world, causing damage in unimaginable proportions. The global output shrank by 3.2
percent in 2020 and the world trade contracted by 8.5 percent (Graph 1.1).
Graph 1.1: GDP Growth Rate of Economies Across the World
8.5
-7.3 9.5 India
4.0
5.2
-2.1 6.3 GDP: Emerging Market and Developing Economies
3.7
4.4
-4.6 5.6 GDP: Advanced Economies
1.6
4.9
-3.2 6.0 GDP: World
2.8
-10 -8 -6 -4 -2 0 2 4 6 8 10 12
2022 (P) 2021 2020 2019
Source: World Economic Outlook, April 2021, IMF.
The world, however, recovered during the second half of 2020 as lockdowns and restrictions
were eased across regions and businesses learned to adapt to new styles of working.
Consequent to this recovery, the IMF has projected a global growth of 6 percent for 2021 and
4.9 percent for 2022. The stronger growth projection for 2021 reflects the anticipated impact of
further fiscal support in major economies and rapid vaccination drives. Likewise, the World
Bank expects a global growth of 5.6 percent in 2021. This recovery, however, is stated to
be highly uneven with countries like US and China leading the growth. US is expected to
182 | Annual Report 2020-21
1.1 Global Economy
A year and a half ago the world was engulfed in a crisis that caused unprecedented contraction
of economic activity, loss of lives and livelihoods and an array of issues that the world is still
grappling with. The handling of the crisis by Central Banks and Governments was, however,
very swift with included liquidity support measures and fiscal safety nets. The outlook for
the world now is highly dependent on how aggressively countries resort to vaccination and
how successful in turn these drives will be in containing the infections. In addition, the active
deployment of fiscal and monetary policies by countries will decide the pace of recovery.
The year 2020 was marked by heightened uncertainty and gloominess as COVID-19 struck
the world, causing damage in unimaginable proportions. The global output shrank by 3.2
percent in 2020 and the world trade contracted by 8.5 percent (Graph 1.1).
Graph 1.1: GDP Growth Rate of Economies Across the World
8.5
-7.3 9.5 India
4.0
5.2
-2.1 6.3 GDP: Emerging Market and Developing Economies
3.7
4.4
-4.6 5.6 GDP: Advanced Economies
1.6
4.9
-3.2 6.0 GDP: World
2.8
-10 -8 -6 -4 -2 0 2 4 6 8 10 12
2022 (P) 2021 2020 2019
Source: World Economic Outlook, April 2021, IMF.
The world, however, recovered during the second half of 2020 as lockdowns and restrictions
were eased across regions and businesses learned to adapt to new styles of working.
Consequent to this recovery, the IMF has projected a global growth of 6 percent for 2021 and
4.9 percent for 2022. The stronger growth projection for 2021 reflects the anticipated impact of
further fiscal support in major economies and rapid vaccination drives. Likewise, the World
Bank expects a global growth of 5.6 percent in 2021. This recovery, however, is stated to
be highly uneven with countries like US and China leading the growth. US is expected to
182 | Annual Report 2020-21
