Page 46 - DHC Budget Book 2021-22 Final

Global Context
The global health crisis prompted by COVID-19,
in addition to an enormous human toll, has engendered the largest economic shock the world economy has witnessed in the last century. The pandemic and associated lockdown measures led to a de facto shutdown of a significant portion of the global economy, thereby triggering a
global recession this year. The world economy is estimated to contract in 2020 by 4.3 per cent, as per World Bank, and 3.5 per cent, as per IMF. The crisis World is facing today is unique in a number of ways.
Firstly, the health crisis-induced global recession is in contrast with previous global recessions
which were driven by confluences of a wide range of factors, including financial crises (the Great Depression in 1930-32; 1982 1991; 2009), sharp movements in oil prices (1975; 1982), and wars (1914; 1917-21; 1945-46). Secondly, this recession is highly synchronized as the fraction of economies experiencing annual declines in national per capita is highest since 1870—more than 90 per cent, even higher than the proportion of about 85 per cent of countries in recession at the height of the Great Depression of 1930-32 (Figure 1). The pandemic
is, therefore, once in a 150-year event with an unprecedented impact with all regions in the world projected to experience negative growth in 2020. It is aptly called the ‘Great Lockdown’.
Figure 1: Once-in-a-Century ‘Synchronized’ Recession
44 Building a Resilient and Confident India
INDIA BUDGET 2021-22
100 90
70
60
50
40
30
20
10
0
More than 90 percent of
economies expected to 80 see contration in per
capita income in 2020
1871
1876
1881
1886
1891
1896
1901
1906
1911
1916
1921
1926
1931
1936
1941
1946
1951
1956
1961
1966
1971
1976
1981
1986
1991
1996
2001
2006
2011
2016
Share of Economies in Recession (%)