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).
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