International Monetary Fund (IMF) has predicted that Asia will experience nearly 0% economic growth this year due to the coronavirus pandemic.
According to IMF, the standstill progression of Asia’s economic growth will be its first time in six decades. Additionally, the pandemic has massively jeopardized the region’s exports, imports, and service sectors.
Despite showing better performance than the rest of the world amidst the pandemic, Asia still projects a below-average growth. Accordingly, the figure is still below the 4.7% average growth rates during global financial crisis.
Even worse, Asian countries have a hard time in conducting exports and imports with their overseas key trading partners, the US and Europe, as both regions also heavily suffer from the virus.
That said, IMF foresees that the region’s economy will bounce back to 9.2% next year. However, it will unlikely happen if another wave of contagion emerges and cancels the normalization.
Also Read: WHO: Coronavirus Pandemic ‘Far from Over’ in Asia
Asia and Coronavirus: IMF Suggests Policy Makers to Support Businesses and Workers
Global reactions towards the contagious COVID-19 have been causing major disruptions in economic activities for months. For now, governments must focus on supporting the livelihood of their citizens suffering from direct and indirect damage such as travel bans, firms’ temporary closure, mass-unemployment, and social distancing.
“These are highly uncertain and challenging times for the global economy. The Asia-Pacific region is no exception,” said Changyong Rhee, director of the IMF’s Asia and Pacific Department.
“The impact of the coronavirus on the region will be severe, across the board, and unprecedented. This is not a time for business as usual. Asian countries need to use all policy instruments in their tool kits.”
Unlike its suggestions to the US, IMF does not advise Asian governments to provide direct cash transfers to their citizens. Instead, the support better addresses the possible sharp increase of unemployment and liquidity.
To be specific, IMF recommends governments to ease financial stress experienced by SMEs to mitigate the danger of further mass-unemployment. In addition, IMF also suggest developing countries to tap bilateral and multilateral swap lines, ask for financial aids from multilateral institutions, and utilize necessary capital controls to combat emerging disruptive capital outflows.
Also Read: Unemployment Possibly Rises as Coronavirus Strikes Indonesia
