Coronavirus ‘economic scarring’ a near certainty for Asia-Pacific as IMF trims 2020 forecast
- The IMF estimates the Asia-Pacific economy to contract 2.2 per cent in 2020, before rebounding to post growth of 6.9 per cent in 2021
- Possible resurgence of Covid-19 and growing tensions between China and the US pose threats to economic recovery, it says
The economic recovery from the Covid-19 pandemic is likely to be sluggish in the Asia-Pacific region this year amid a possible resurgence of the disease and escalating US-China frictions, the International Monetary Fund (IMF) said on Wednesday.
The IMF estimated the region’s economy would contract 2.2 per cent in 2020, a downward revision of 0.6 percentage points from its forecast in June, driven by “sharper than expected” downturns in India, the Philippines and Malaysia, according to its October regional outlook report.
The Washington-based organisation upgraded China’s growth forecast to 1.9 per cent for 2020, due to faster-than-expected recovery in the second quarter.
Economic scarring seems a near-certainty at this point. Our projections suggest that potential output by the middle of this decade could be some 5 per cent lower than before the pandemic
China bucked the second quarter trend for emerging Asia, with India and the Philippines suffering sharp drops in economic activity as new infections climbed and lockdowns were extended to contain the virus outbreak.
