- 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
- 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 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, India’s growth rate has not been tweaked for the worse.
- Beyond the IMF, Several high-frequency indicators have suggested that India’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.
- 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.
- 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 India’s growth momentum.