The International Monetary Fund says Asia’s economic growth will come to a halt in 2020 for the first time in 60 years amid the coronavirus pandemic.
The outbreak will have a “severe” impact on the region’s service sector and major export destinations, the IMF said in a report Thursday.
“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,” said Changyong Rhee, director of the IMF’s Asia and Pacific Department.
“This is not a time for business as usual. Asian countries need to use all policy instruments in their toolkits,” Rhee told a virtual news briefing conducted with live webcast. “In doing so, policy tradeoffs will be inevitable and will depend on policy space."
Although Asia is expected to fare better than other regions being impacted by economic contractions, the projection is worse than the 4.7% average growth rates throughout the global financial meltdown, and the 1.3% rise during the Asian financial crisis in the late 1990s, the IMF said in its report.
The IMF projects a 7.6% expansion in Asian economic growth next year provided that containment policies will be fruitful, but added the outlook was highly tentative.
"For 2021, there is hope: if containment policies succeed, we will see a rebound in growth," Rhee said.
In comparison with the global financial crisis caused by the 2008 collapse of Lehman Brothers, the coronavirus pandemic is mainly affecting the region’s service sector by forcing households to stay home and shops to remain closed, the IMF said.
The region’s export powerhouses were also suffering from a decreasing demand for their goods by key trading partners such as the United States and European countries, it said.
Meanwhile, Asia stocks are expected to tumble as investors are worried about the possibly worst recession since 1930s.
Over 2,000,000 have been affected so far and more than 134,000 have died of the coronavirus.
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