TOKYO: Asia’s economy is expected to stall at zero percent this year, the worst growth performance in almost 60 years, said the International Monetary Fund (IMF) on Wednesday.
“This is a crisis like no other. It is worse than the global financial crisis, and Asia is not immune. The impact of the coronavirus on the region will – across the board – be severe and unprecedented,” said Chang Yong Rhee, director of the IMF’s Asia and Pacific Department.
Asia’s GDP growth registered 4.7 percent during the global financial crisis, and 1.3 percent during the Asian financial crisis, according to the IMF.
Under the current situation, Rhee said that the first priority is to support the health sector to contain the coronavirus and introduce measures that slow contagion, especially targeted support to hardest-hit households and firms.
Monetary policy and domestic demand stimulus should be used to ensure ample liquidity for businesses. Also, bilateral and multilateral swap lines and financial support from the multilateral institutions should be sought, said Rhee.
The global economy is expected to shrink by three percent in 2020, said the latest World Economic Outlook (WEO) report released on Tuesday.
Advanced economies will be hit hardest from the pandemic and significantly shrink by 6.1 percent. The WEO report predicts that the U.S. economy will contract by 5.9 percent, and Euro zone economies by 7.5 percent, in 2020. Emerging market and developing economies, on the other hand, will shrink by one percent.
The report also shows that China will maintain a positive growth of 1.2 percent in 2020 with the accelerated resumption of production activity. India will also see a moderate growth of 1.9 percent this year.
“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,” Rhee said.
As for prospects for 2021, Rhee said if containment measures work, and with substantial policy stimulus, growth in Asia is expected to rebound strongly, more so than during the global financial crisis.