IMF: Asia's economic growth to halt for first time since 1960s

Police officers checking and inspecting car drivers during the Movement Control Order period due to the coronavirus pandemic at a checkpoint in Kuala Lumpur on Saturday (April 18). The International Monetary Fund (IMF) believes Asia's fast-growing economies will "come to a standstill" due to the Covid-19 (coronavirus) pandemic, faring worse than during the 2008-9 global financial crisis or the 1997-98 Asian crash. - Bernam

HONG KONG/SINGAPORE: The International Monetary Fund (IMF) believes Asia's fast-growing economies will "come to a standstill" due to the Covid-19 (coronavirus) pandemic, faring worse than during the 2008-9 global financial crisis or the 1997-98 Asian crash.

The region will experience zero growth for the first time since the 1960s, said Chang Yong Rhee, director of the IMF's Asia and Pacific Department, who forecast that the economic impact of the pandemic will be "severe, across the board, and unprecedented."

Rhee said during a live-conference via online that Asia faces "a crisis like no other" due to the pandemic, which has killed over 136,000 people worldwide and prompted governments to impose lockdowns that have hampered commerce.

"Containment measures are severely affecting economies," Rhee said.

Though Asia will "fare better than other regions," it will nonetheless be hard-hit, in part due to a "deterioration of external demand" in Europe and North America, where severe recessions are expected.

This week, the IMF predicted that "the Great Lockdown" will cause the worst global downturn since the Great Depression of the 1930s.

Unlike during the 2008-9 crisis, economic growth in China, Asia's biggest economy and where the pandemic originated in late 2019, will plummet - from 6.1% in 2019 to 1.2% this year.

Economies that depend on trade with China, such as Australia and those of South-East Asia, will likely see sharp recessions.

The IMF forecasts contractions of 6.7% for Australia and Thailand, with Malaysia likely to see its economy shrink by 1.7%, slightly-less than the 2%

decline forecast by the country's central bank.

A new report by the secretariat of the Association of South-East Asian Nations (Asean), a regional inter-governmental organization, warned that member states will be slammed by a combination of slowdown in China and travel bans imposed due to the pandemic.

The secretariat said that tourism in South-East Asia "benefits from the large influx" from China, while across the region, "supply chains are heavily integrated with China’s manufacturing sector."

Indonesia and the Philippines will see growth flatten to around one per cent, with recessions only kept at bay due to the weight of consumer spending by their large populations.

The collapse in oil prices since the onset of the pandemic will also hit energy-dependent economies hard, the IMF outlined, with East Timor, which depends on energy revenues for almost all government spending, facing a 3% contraction.

Elsewhere, factors such as "reduced tourism, disrupted trade and manufacturing" will weigh heavily, according to the IMF.

Japan, Asia's second-biggest economy, could shrink by 5.2%.

While Cambodia, where tourism makes up almost a fifth of gross domestic product, is facing negative growth of 1.6 per cent - a steep decline compared to the 7% growth the country has enjoyed most years over the past decade.

Countries across Asia have announced huge government spending proposals aimed at cushioning the economic impact of the pandemic.

According to economists at Dutch bank ING, "countries with deep pockets," such as Australia and Singapore, will be better able to live up to their spending plans.

Some countries have included measures such as loans and tax breaks in fiscal plans, suggesting that the cash available to help hard-pressed businesses is less than it appears on paper.

According to ING, "those with weaker financial positions, Malaysia, Indonesia, have had to bulk the packages out more and their genuine fiscal support is typically lower." - dpa
Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

Asian , IMF , Growth Lower in 2020


Next In Regional

Chinese tech names among the fastest growing valuable brands in the world but US companies still dominate
China’s TikTok gets its own web version as user growth plateaus, nearing the country’s total mobile user base
India tests longer-range drone flights, eyes Covid-19 vaccine deliveries
Amazon bans Chinese merchants for alleged attempts to bribe customers to write good reviews
Bitcoin crackdown sends graphics cards prices plummeting in China after Sichuan terminated mining operations
Hong Kong police to boost computing power for new anti-money-laundering squad to help screen surge in suspicious financial transactions
Covid-19: 4,743 new cases bring total to 705,762
ByteDance founder donates US$77mil to education fund
Covid-19: Over six million doses of vaccines given as of Monday (June 21)
China’s short-form video market soars amidst pandemic year, study shows

Stories You'll Enjoy