Bangkok, Apr 16 (efe-epa).- The economies of the Asia-Pacific region will experience zero growth in 2020 – the worst since the 1960s – due to the COVID-19 pandemic although they will rebound strongly next year, the International Monetary Fund (IMF) said Thursday.
Growth in Asia will be lower than even that experienced during the 2008 global financial crisis – when it was 4.7 percent – and during the 1998 Asian financial crisis, when the region grew at 1.3 percent, the Director of the IMF’s Asia and Pacific Department, Chang Yong Rhee, said in an article on agency’s blog.
“That said, Asia still looks to fare better than other regions in terms of activity,” said Rhee, adding that the global economy was expected to shrink 3 percent, the worst recession since the Great Depression of 1929.
“Asia’s key trading partners are expected to contract sharply, including the United States by 6.0 percent and Europe by 6.6 percent,” the expert said.
According to Rhee, China’s growth will contract from 6.1 percent in 2019 to 1.2 percent in 2020, in contrast to the 9.4 percent growth the country posted in 2009 following the global financial crisis on account of a fiscal stimulus by the government of 8 percent of its gross domestic product.
“We cannot expect that magnitude of stimulus this time, and China won’t help Asia’s growth as it did in 2009,” the South Korean economist concluded.
There have also been downward revisions of over 9 percentage points in the case of New Zealand (-7.2 percent), Australia (-6.7 percent) and Thailand (-6.7 percent) while Pacific island countries are among the most vulnerable due to their limited healthcare and financial capacity.
Rhee said that the prospects for 2021 are for “strong growth” despite being highly uncertain as they depend on the effectiveness of measures to contain the novel coronavirus and policy stimulus measures by governments.
The IMF expert recommended targeted support to hardest-hit households and firms, given directly, not just through financial institutions.
“Targeted support, combined with domestic demand stimulus in a recovery, will help to reduce scarring, but it needs to reach people and smaller firms,” he said.
“Monetary policy should be used wisely to provide ample liquidity, ease financial stress of industries and small and medium-sized enterprises, and, if necessary, relax macroprudential regulations temporarily,” according to Rhee.
Although central banks across the region have taken steps to provide liquidity in the market, slash interest rates and used quantitative easing, “additional actions may be needed for emerging-market Asian economies that have limited space for increased spending in their budgets,” the IMF expert said. EFE-EPA