Due to the coronavirus, Asia's economy is not likely to experience growth this 2020 for the first time in 60 years, according to the International Monetary Fund (IMF).
“This is a crisis like no other. It is worse than the Global Financial Crisis, and Asia is not immune,” said Chang Yong Rhee, director of the Asia and Pacific Department at the IMF, in a blog post published on Wednesday.
“While there is huge uncertainty about 2020 growth prospects, and even more so about the 2021 outlook, the impact of the coronavirus on the region will — across the board — be severe and unprecedented,” he added.
Asia is considered to be one of the fastest-growing regions in the world. Before the coronavirus, the Asian financial crisis in 1997 and the global financial crisis in 2008-2009 did not deter Asia's economy. It still recorded average growth rates of 1.3% and 4.7%, respectively, according to IMF.
However, the coronavirus pandemic, which already infected over two million people and killed over 130,000, slowed down global economic activity as governments impose lockdown measures to curb the fast-spreading disease.
On Tuesday, the IMF pointed out that the global economy may plunge by 3% this year. The economies of Asia’s largest trading partners may grapple with deep contractions: The U.S. is expected to fall by 5.9%, while the euro area in general may contract 7.5%.
China is considered one of the few economies expected to grow in 2020, based on the fund’s forecasts. However, the IMF’s 1.2% growth prediction for the country seems a sharp slowdown from China’s previous economic records.
“This sharply contrasts with China’s growth performance during the Global Financial Crisis, which was little changed at 9.4 percent in 2009 thanks to the important fiscal stimulus of about 8 percent of GDP,” Rhee wrote, explaining gross domestic product, which is a broad measure of the size of an economy.
“We cannot expect that magnitude of stimulus this time, and China won’t help Asia’s growth as it did in 2009,” he added.
Because of that, the IMF implemented “substantial” downward revisions in its forecasts for Asian economies, said Chang.
These are some of the forecasts based on the prepared remarks by Rhee planned for a press conference in Washington D.C.:
- Japan to shrink by 5.2%
- India to grow by 1.9%
- South Korea to shrink by 1.2%
- Southeast Asia’s five largest economies — Indonesia, Thailand, Malaysia, Singapore and the Philippines — to collectively contract by 1.3%
Asia “looks to fare better than other regions in terms of activity,” Rhee wrote in the blog post. He pointed out that Asia's economy could recover strongly in 2021 if measures to fight the virus and stimulus to shore up the economy become effective.
“But there is no room for complacency,” he said.
“The region is experiencing different stages of the pandemic. China’s economy is beginning to get back to work, other economies are imposing tighter lockdowns, and some are experiencing a second wave of virus infections. Much depends on the spread of the virus and on how policies respond.”
In its statement this week, IMF said that global economy loss due to coronavirus pandemic will likely turn out as the worst financial crisis since the Great Depression.
“It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago,” Gita Gopinath, the IMF’s chief economist, said in the latest World Economic Outlook report.
