The Asian economy will suffer its worst recession this year, as some of its powers are suffering the consequences of the coronavirus pandemic, which led the International Monetary Fund to lower its prospects for the region on Wednesday.
The IMF now expects economic expansion in Asia to contract by 2. 2% this year, 0. 6% less than expected in June, and what Jonathan Ostry, acting director of the IMF’s Asia-Pacific department, called “the worst outcome to be remembered. “
“This reflects a sharper contraction, in India, the Philippines and Malaysia,” the IMF said in its regional economic outlook.
“The news is that we forecast that the region will grow by 6. 9% by 2021. But even with this increase, production will decline until the end of 2021 than our prepandemic projection,” Ostry said.
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China is the notable exception in Asia, having been the first primary economy to fight COVID-19, when the initial outbreak of the disease dates back to a market in Wuhan Province, China virtually eliminated mortality and infection rates. Economic activity has almost returned, to pre-pandemic levels.
“China, which suffered the pandemic hit before other countries, has experienced a very strong recovery since the end of the first quarter, and expansion has been revised to 1. 9% this year, a rare figure in a sea of negatives,” Ostry says.
The IMF said the scars left by the pandemic, which has already killed more than one million international people so far, will be deep, with declining labor market share and frustrated confidence that will reduce personal investment. 5% below prepandemic levels, the IMF said.
India has been one of the most affected countries in the region, accounting for about 10% of deaths worldwide. The economy through a maximum of a quarter in the 3 months to June and the IMF expects only a slow recovery so far.
In the longer term, the pandemic will create a “multi-speed” Asia, in which countries that have implemented effective containment measures from the outset and timed out accordingly will outperform those that have not, the IMF said.
The IMF said countries want a comprehensive arsenal of expansion response policies that are still on track and described 4 in particular.
First, governments and central banks will not have to withdraw their fiscal and financial operations too temporarily to allow the recovery to be strengthened.
Second, countries will have to protect their poorest and most vulnerable citizens, especially women and girls, who have suffered unduly at all times, the IMF said. If you don’t, it could lead to social unrest.
Third, national central banks and governments want to monitor emerging or future credit hazards for businesses and households. The debt burden is a major vulnerability, given the weakened monetary scenario of companies, the fund said.
“The message is clear: the region has the means to build a longer term for its citizens. With the right and foreign policies when needed, Asia’s engines can once recoil paints in combination and propel the region in the long run,” the IMF said.
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