Pandemic to bring Asia’s growth to a halt for first time in 60 years: IMF
tokyo — Asia’s economic growth this year will grind to a halt for the first time in 60 years, as the coronavirus crisis takes an “unprecedented” toll on the region’s service sector and major export destinations, the International Monetary Fund said on Thursday.
Policymakers must offer targeted support to households and firms hardest-hit by travel bans, social distancing policies and other measures aimed at containing the pandemic, said Changyong Rhee, director of the IMF’s Asia and Pacific Department.
“These are highly uncertain and challenging times for the global economy. The Asia-Pacific region is no exception. The impact of the coronavirus on the region will be severe, across the board, and unprecedented,” he told a virtual news briefing conducted with live webcast.
“This is not a time for business as usual. Asian countries need to use all policy instruments in their toolkits.”
Asia’s economy is likely to suffer zero growth this year for the first time in 60 years, the IMF said in a report on the Asia-Pacific region released on Thursday. While Asia is set to fare better than other regions suffering economic contractions, the projection is worse than the 4.7 per cent average growth rates throughout the global financial crisis, and the 1.3 per cent increase during the Asian financial crisis in the late 1990s, the IMF said.
The IMF expects a 7.6 per cent expansion in Asian economic growth next year on the assumption that containment policies succeed, but added the outlook was highly uncertain.
Unlike the global financial crisis triggered by the 2008 collapse of Lehman Brothers, the pandemic was directly hitting the region’s service sector by forcing households to stay home and shops to shut down, the IMF said. The region’s export powerhouses were also taking a battering from slumping demand for their goods by key trading partners such as the United States and European countries, it said.
China’s economy is expected to grow by 1.2 per cent this year, down from 6 per cent growth in the IMF’s January forecast, on weak exports and losses in domestic activity due to social distancing steps. Growth would bounce back to 9.2 per cent next year, the IMF said. —