The World Bank on Monday warned that the coronavirus pandemic is expected to sharply slow growth in developing economies in East Asia and the Pacific as well as China, reported AFP. The bank added that the disease will drive millions into poverty.
The coronavirus is causing “an unprecedented global shock, which could bring growth to a halt and could increase poverty across the region,” said Aaditya Mattoo, World Bank chief economist for East Asia and the Pacific.
The bank said precise growth forecasts were difficult, given the rapidly changing situation, but its baseline now called for growth in developing economies in the region to slow to 2.1% in 2020, and to -0.5% in a worse-case scenario, compared to estimated growth of 5.8% in 2019, according to AP.
In China, where the coronavirus outbreak originated late last year, growth was projected to slow to 2.3% in the baseline scenario, or as low as 0.1% in the lower-case scenario, compared to growth of 6.1% in 2019. It added that the country may escape a recession but will nonetheless suffer a sharp slowdown.
In an updated forecast released on Monday, the World Bank urged countries in the region to invest in healthcare capacity and to follow Korea’s example to ramp up testing and containment measures so that economies can begin to return to normal more quickly. “This is not rocket science,” Mattoo said. “With help, even poorer countries can do it.”
“Containment of the pandemic would allow recovery, but the risk of durable financial stress is high even beyond 2020,” the World Bank added. “Most vulnerable are countries that rely heavily on trade, tourism, and commodities; that are heavily indebted; and that rely on volatile financial flows.”
The baseline scenario called for nearly 24 million fewer people to escape poverty across the region in 2020 due to the pandemic. If the economic situation deteriorated even further, poverty could increase by about 11 million people, the bank said.
The World Bank also urged countries to forge deeper international cooperation and new cross-border public-private partnerships to ramp up the production and supply of key medical supplies and services, and ensure financial stability in the aftermath of the crisis. “In this interdependent world where our economic destinies are intertwined, there’s going to be mutual amplification, because the shock is simultaneously affecting all these important countries,” Mattoo told reporters.
There are 37,639 virus-linked deaths globally and the number of confirmed cases is 7,84,716, according to Johns Hopkins university’s update.
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