The “Great Lockdown, as one might call it, is projected to shrink global growth dramatically”, the International Monetary Fund (IMF) declared on Tuesday.

India and China are the only two significantly important economies that are expected to buck the global recession that the IMF has forecast for 2020. Although growth in India is predicted to plunge this year to 1.9 per cent, India can take heart from the fact that the IMF has forecast a sharp rebound in 2021 to 7.4 per cent.

In its 2020 World Economic Outlook, the IMF said the global economy is expected to shrink by 3 per cent during 2020 in a stunning coronavirus-driven collapse of activity that will mark the steepest downturn since the Great Depression of the 1930s.

The 3 per cent contraction is an extraordinary reversal from earlier this year, when the IMF forecast that the world economy would outpace 2019 and grow by 3.3 per cent.

“This is a crisis like no other, and there is substantial uncertainty about its impact on people’s lives and livelihoods,” Gita Gopinath, the IMF’s chief economist, told a news conference via a video link.

For India, the Fund’s forecast of 1.9 per cent growth this fiscal (April 2020-March 2021) represents a sharp plunge from the 5.8 per cent it had forecast in its January update.

China is forecast to fare worse: growth in 2020 is projected to slump to 1.2 per cent from the January forecast of 6 per cent.

The 7.4 per cent recovery projected for India in 2021 is 0.9 percentage points higher than its earlier estimate of 6.5 per cent.

The recovery in China is predicted to be far more robust at 9.2 per cent in 2021 — which means it will once again reclaim the title of the fastest-growing economy. The latest forecast for China’s growth in 2021 is a sharp 3.4 percentage points higher than the earlier projection of 5.8 per cent.

For the world economy, the IMF predicted a partial rebound in 2021, growing at 5.8 per cent. But the IMF said its forecasts were marked by “extreme uncertainty” and that outcomes could be far worse, depending on the course of the pandemic.

The IMF’s forecasts assume that outbreaks of the novel coronavirus will peak in most countries during the second quarter and fade in the second half of the year, with business closures and other containment measures gradually unwound.

A longer pandemic that lasts through the third quarter could cause a further 3 per cent contraction in 2020 and a slower recovery in 2021, due to the “scarring” effects of bankruptcies and prolonged unemployment.

A second outbreak in 2021 that forces more shutdowns could cause a reduction of 5 to 8 percentage points in the global GDP baseline forecast for next year, keeping the world in recession for a second straight year.

Additional reporting from Reuters and NYTNS