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Current Affairs

IMF outlook and status of jobs

Date: 21 October 2021 Tags: Miscellaneous

Issue

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

  • The main outcome of the report indicated that the momentum of economic recovery has slowed down due to the pandemic-induced supply disruptions. 

  • The main concern expressed by the IMF was regarding the increasing inequality among nation rather than the growth numbers.

 

Main outcomes

  • 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.

  • The growth rate of emerging economies is expected to remain 5.5 per cent below the pre-pandemic forecast in 2024.

  • 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.

  • High skilled and prime age workers are expected to spare better than young and low-skilled workers.

 

Reasons for slowing of employment growth

  • Difference in economic policies and large disparities in vaccine access are the main reasons behind the weak numbers.

  • Other reasons include fears of on-the-job infection, frictions in job searches and matching, labor demand changes etc.

 

Implications for India

  • Recovery in employment lags behind the recovery in output. The number of people employed was 11 million below the pre-pandemic levels.

  • 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

  • India is witnessing a K-shaped recovery. Some sectors are witnessing faster growth while others are still lagging behind.

  • Majority of India’s employment is in the informal or unorganised sectors. Inability of the sector to create jobs will prevent economy from recovering.