[ad_1]
The IMF has painted a bleaker picture for Asia. On Wednesday (October 21), the International Monetary Fund revealed that Asia’s economic contraction this year will be worse than previously thought. In its latest Asia-Pacific Regional Economic Outlook report, the IMF predicts that the region’s economy shrink by 2.two%, worse than a previous one 1.Contraction of 6% according to the fund’s forecasts in June.
Although Asia and the Pacific has started to recover, economic activity in the region is moving “Multiple speeds”. In general, prospects vary by country depending on infection rates and containment measures, scale and effectiveness of the policy response, dependence on contact-intensive activities, and dependence on external demand.
The downward revision of 0.6 percentage points was due to a steeper-than-expected slowdown in key emerging markets, especially in India, the Philippines and Malaysia. Asia is divided into 3 categories: advanced economies (8 countries), emerging markets and developing economies, EMDE (15 countries) and other small states (15 countries).
Here is the fund forecast for the three economies:
- The Indian economy is expected shrink 3% in the fiscal year ending March 31, 2021, worse than 4.Forecast of contraction of 5% in June.
- The Philippine economy is expected to sink 3% in calendar year 2020 – worse than 3.A contraction of 6% is projected in June.
- Malaysia’s economy probably shrink 6% this year, worse than the IMF’s June forecast of 3.8% shrinkage.
Citing continuing fears of infection, social distancing measures and border closures that will particularly affect tourism-dependent countries, the IMF wrote: “Returning to full capacity will be a long work“. While India and the Philippines are particularly hard hit by a continued rise in virus cases and the prolonged lockdown, Thailand’s dependence on tourism caused its economy to contract 12.2% in the second quarter.
In India, activity slumped 24% year-on-year in the second quarter, with large contractions in all sectors except agricultural production, where record harvests and fewer virus cases have supported the rural economy. In the Philippines, the drop in remittances exacerbated the impact on economic activity and the Pacific island countries.
Malaysia, on the other hand, is still struggling to revive its economic engine after a 17.1% contraction in the second quarter of 2020 from 0.7% growth in the first quarter. The country ends reimposed a nationwide lockdown – Conditional Movement Control Order (CMCO) – as new coronavirus cases spiked and rapidly approached 1,000 cases, largely due to Sabah state elections.
Among the advanced economies of Asia, all countries: except taiwan – are expected to experience negative economic growth of between minus 1.9% (Korea) and minus 52.3% (Macau). The economies of Australia and Japan are projected to contract by 4.2% and 5.3% respectively in 2020. Overall, advanced economies are expected to contract by 4.2% this year.
However, not all Asian economies saw their economic figures cut. As expected, China leads the region’s recovery. The Washington-based IMF has raised Chinese economic growth to 1.9% from its June projection of 1% for 2020. The bottom said China update it was due to “a faster than expected rebound” in the second quarter.
Learning from China, the IMF said the Asian giant escape strategy shows that a sequenced approach that prioritizes essential sectors and reopens regions based on forward-looking risk assessments can reduce the economic costs of lockdowns and minimize health risks. After hitting a low point in February 2020, China’s growth received a boost from infrastructure, real estate investment, and a surge in exports.
Like China, Vietnam has taken a sequential approach, reopening lower-risk regions or sectors first, and has also reimposed localized lockdowns if necessary to control new groups of viruses. It has used a comprehensive tracking system to quarantine all close contacts of positive cases. By interim quickly At the beginning of the pandemic, Vietnam saw a reduction in infections by more than 95% relative to a baseline without containment measures.
Among EMDE countries, several countries are expected to publish Positive GDP growths in 2020 despite the effects of the pandemic, including Bangladesh (3.8%), Myanmar (2%), Vietnam (1.6%) and, of course, China (1.9%). Among the small Pacific states, only the economies of Nauru and Bhutan are projected to generate positive growth of 0.7% and 0.6% respectively.
Although the recovery is expected to be slow, the Asia-Pacific region is forecast to grow by 6.9% in 2021 – approximately 0.3 percentage points more than the IMF projected in June. China’s economic growth in 2021 is expected to rebound to 8.two%. However, geopolitical tensions, particularly US-China dispute – may affect recovery in the region.
Stronger recovery in China, the United States and the euro area will support growth in Asia. But a Second wave of the pandemic on a global scale cannot be ruled out. Until a vaccine is developed, fear of infection and social distancing measures are simultaneously undermining consumer confidence in the region.
The International Monetary Fund also noted that while economic activity would begin to normalize, especially in hard-hit emerging market economies next year, overall regional production would remain “below” pre-coronavirus pandemic levels in the medium term. To make matters worse, international borders are likely stay closed for a considerable period.
More importantly, the IMF warned that the pandemic has a major impact on low-income workers, women, and youth in the Work market – “Total hours worked has decreased as both employment rates and hours worked per employee have collapsed. Unemployment has increased and labor force participation has plummeted, especially for women and younger workers.
Therefore, maintaining adequate fiscal support is critical and of the utmost importance to ensure that the recovery does not unravel. Priorities should include spending on health care, targeted social protection, and assistance to small and medium-sized enterprises. Investments in green energy and technological infrastructure should be prioritized to Create jobs.
TWITTER FINANCE
.
[ad_2]
