Page 391 - ES 2020-21_Volume-1-2 [28-01-21]
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18 Economic Survey 2020-21 Volume 2
Global output is expected to witness the sharpest contraction in a century, contracting in the range
of 3.5 - 4.3 per cent in 2020 as per the estimates provided by IMF and World Bank (Figure 12). The
cumulative loss to global GDP over 2020 and 2021 is estimated at around USD 9 trillion – greater
than the economies of Japan and Germany combined. Loss of output is anticipated to be more
severe in AEs at 5.4 per cent compared to EMDEs, excluding China, which stood at 5.0 per cent
for the year 2020 (Figure 12). This is aligned with the more severe impact of the pandemic spread
in AEs than EMDEs as was seen above. The estimates for global growth were revised upward
through the year with easing of lockdowns and resurgence in economic activity in July-September
quarter of the year. The rebound in global activity has, however, been uneven and subdued since
the beginning of second half of the year due to resurgence in COVID-19 infection rates in AEs.
Figure 12: Trend in Global Growth
15
10
Real GDPgrowth rate (in %) 5 0
-5
-10
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E 2021F
World AEs Euro area EMDE India
Source: IMF
Note: E is Estimate, F is Forecast
1.19 The pandemic induced border closures and supply disruptions interrupted the international
provision of goods and services. The Global composite Purchasing Managers Index (PMI) was
in contraction for five months before July, 2020 (Figure 13). Global trade is projected to contract
by 9.2 per cent in 2020—comparable to the decline during the 2009 global recession but affecting
a markedly larger share of economies (Figure 14). Trade has, however, played a critical role in
responding to the pandemic, allowing countries to secure access to vital food and medical supplies.
1.20 Most commodity prices rebounded from their mid-2020 lows as strict lockdowns were
gradually lifted and demand firmed, especially from China (Figure 15). The recovery in oil
prices was more modest amid concerns over the pandemic’s lasting impact on oil demand.
Gold emerged as a safe-haven investment in the backdrop of the pandemic prices with prices
increasing by 26.2 per cent in November, 2020 as compared to December, 2019. Food prices
also surged during the year reflecting supply chain disruptions. As a result of weak demand
and subdued energy prices, inflation moderated in most part of the world, deflationary pressure
emerged in major AEs. Fall in inflation in EMDEs was less broad based than in AEs, reflecting
the effects of sharp currency depreciations as well as rising domestic food prices in some
countries (Figure 16).