Business & Economy

World Bank warns China’s growth could fall sharply due to COVID-19

Washington DC, Mar 30 (efe-epa).- The World Bank on Monday predicted that China’s economy will slow sharply in 2020 due to the coronavirus outbreak, with a growth estimate of 2.3 percent in the baseline scenario and just 0.1 percent in the lower-case scenario.

This is the first forecast by the World Bank since the start of the coronavirus pandemic and contrasts the 6.1 percent growth China experienced in 2019.

“We are witnessing an unusual combination of disruptive and mutually reinforcing events. Significant economic pain seems unavoidable in all countries and the risk of financial instability is high, especially in countries with excessive indebtedness,” the World Bank said in a report on East Asia and Pacific (EAP).

In the case of China, the organization warned that industrial production in the country “also registered negative growth for the first time in more than 30 years.”

“It remains to be seen whether the government can switch on economic activity as abruptly as it was switched off,” the report said. “A large proportion of big industrial firms in China have already resumed operations, although small and medium enterprises continue to face problems.”

According to the Bank, growth in the rest of the developing EAP region is expected to slow to 1.3 percent in the baseline and to -2.8 in the lower-case scenario in 2020, from an estimated 4.7 percent in 2019.

The pandemic will also have a serious impact on poverty and welfare, the World Bank warned.

“Under the baseline growth scenario, nearly 24 million fewer people are estimated to escape poverty across developing EAP in 2020 than would have in the absence of the pandemic. Under the lower-case scenario, poverty is estimated to increase by about 11 million people,” according to the international organization.

Particularly vulnerable, the World Bank added, are the tourism sectors in Thailand and the Pacific Islands, and textile workers in Cambodia and Vietnam.

As a “vaccine against this virulent threat,” Aaditya Mattoo, the World Bank’s Chief Economist for East Asia and the Pacific, recommended that countries in the region deepen international cooperation, keep trade policy open, and coordinate macroeconomic policies. EFE-EPA

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