Congress leader Shashi Tharoor today hinted at the radical changes brought about by COVID-19 in the global economic hierarchy by asking a pointed question: “Is the IMF's relocation to Beijing imminent?”
Recovering from the COVID-19 slump, China now not only leads the global economic recovery, but will also be the only major economy to expand in 2020. Some reports even say it may already have overtaken the US as the world's largest economy.
Mr Tharoor's apparent jibe was based on IMF's founding rules which say that the organisation must shift its base to the world's largest economy.
The International Monetary Fund's by-laws specify that its headquarters will be located in the world's largest economy. For 75 years this placed it in Washington,DC. With the way the US & Chinese economies are moving after #Covid-19, is the IMF's relocation to Beijing imminent?— Shashi Tharoor (@ShashiTharoor) October 20, 2020
The IMF itself says China will be the only major economy to grow this year. It predicts that China will expand 1.9% in 2020, while the U.S. would shrink by 4.3%. China's growth will accelerate to 8.4% next year, says the IMF, compared to 3.1% in the United States. Challenging!— Shashi Tharoor (@ShashiTharoor) October 20, 2020
The proportion of worldwide growth coming from China is expected to increase from 26.8 percent in 2021 to 27.7 percent in 2025, according to calculations based on IMF data.
The world GDP is expected to shrink 4.4 percent this year, an improvement from the 4.9 percent drop seen in June, according to the latest World Economic Outlook released last week. Next year, the IMF sees growth of 5.2%.
India, meanwhile, is set to drop below Bangladesh in terms of per capita GDP as the economy, according to the IMF, is projected to contract by a massive 10.3 percent this year. The IMF's forecast for India, a huge downward revision from its previous prediction in June, will see the biggest contraction among major emerging markets amid the coronavirus pandemic.
However, Asia's third-largest economy is likely to bounce back with an impressive 8.8 percent growth rate in 2021, thus regaining the position of the fastest growing emerging economy, surpassing China's projected growth rate of 8.2 percent, the IMF said.
IMF, along with World Bank, was founded in 1945 following World War II to help rebuild the global economy ravaged by the conflict.