Ojaank IAS Academy

OJAANK IAS ACADEMY

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OJAANK IAS ACADEMY

WORLD ECONOMIC OUTLOOK

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INTRODUCTION

  • Last week, the IMF unveiled its 2nd world Economic Outlook (WEO).
  • The IMF comes out with the report twice every year-April and October.

SIGNIFICANCE OF THE REPORT

  • The WEO reports are significant because they are based on a wide set of assumptions about a host parameters such as-
  • The international Price of crude oil
  • Set the benchmark for all economies to compare one another with.

MAIN TAKE AWAYS FROM WEO OCTOBER REPORT

CENTRAL MESSAGE-

  • The Global Economic recovery momentum had weakened to a small extent, largerly due to the pandemic induced supply disruption.
  • It is increasing inequality among nation.

OTHER TAKE AWAYS

  • The dangerous divergence in economic prospects across countries remains a major concern
  • Aggregate output for the advanced economy group is expected to regain its Pre-Pandemic trend path in 2022 and exceed it by 0.9% in 2024.
  • Aggregate Output for the emerging market and developing economy group (excluding china) is expected to remain 5% below the Pre-pandemic forecast in 2024.
  • Employment growth likely to lag the output recovery.

Two Key Reasons For The Economic Divergence:-

  • Large disparties in vaccine access.
  • Differences in policy support.

EMPLOYMENT

  • Employment around the world remains below its Pre-Pandemic level

CONCERNS RELATED TO EMPLOYMENT

  • Gap between recovery in output and employment is likely to be larger in emerging markets and developing economies than in advanced economies.
  • Young and low-skilled0 workers are likely to be worse off than prime-age and high-skilled workers.

IMPACT ON INDIA

  • As far as GDP is concerned, Indiaโ€™s growth rate has not been tweaked for the worse.
  • Beyond the IMF, Several high-frequency indicators have suggested that Indiaโ€™s economic recovery is gaining ground.
  • IMF Projections on Employment:-

The recovery in umemployment is lagging the recovery in output (or GDP) matters immensely for India.

CMIE DATA

  • According to the data available with the centre for Monitoring Indian Economy (CMIE), the total number of employed people in the Indian economy as the May-August 2021 was 394 million that is 11 million below the level set in May-August 2019.

In May-August 2016 the number of employed people was 408 million.

CONCLUSION

  • India was already facing a deep employment crisis before the covid crisis, and it became much worse after it.
  • Lack of adequate employment levels would drag down overall demand and thus stifle Indiaโ€™s growth momentum.

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