IMF outlook and status of jobs
Date: 21 October 2021 Tags: MiscellaneousIssue
The World Economic Outlook (WEO) has been unveiled by the IMF. This is the second such report of this year.
Background
The World Economic Outlook (WEO) is release twice a year in April and October. They are important as they set the benchmark for all economies to compare with one another.
Details
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The main outcome of the report indicated that the momentum of economic recovery has slowed down due to the pandemic-induced supply disruptions.
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The main concern expressed by the IMF was regarding the increasing inequality among nation rather than the growth numbers.
Main outcomes
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The advanced economic group is likely to increase its growth numbers by 0.9 per cent in 2024 after regaining its pre-pandemic levels in 2022.
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The growth rate of emerging economies is expected to remain 5.5 per cent below the pre-pandemic forecast in 2024.
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The main forecast is that the employment growth likely to lag the output recovery. It is expected to be larger in emerging markets and developing economies.
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High skilled and prime age workers are expected to spare better than young and low-skilled workers.
Reasons for slowing of employment growth
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Difference in economic policies and large disparities in vaccine access are the main reasons behind the weak numbers.
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Other reasons include fears of on-the-job infection, frictions in job searches and matching, labor demand changes etc.
Implications for India
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Recovery in employment lags behind the recovery in output. The number of people employed was 11 million below the pre-pandemic levels.
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This indicates that large population will be left out of the benefits of higher GDP growth. The overall growth momentum will be arrested on longer run.
Unemployment and growth
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India is witnessing a K-shaped recovery. Some sectors are witnessing faster growth while others are still lagging behind.
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Majority of India’s employment is in the informal or unorganised sectors. Inability of the sector to create jobs will prevent economy from recovering.