Pandemic crisis to hit economic growth in Asia, China, World Bank says

Developing economies in East Asia and the Pacific, as well as China, are expected to suffer steep decline in growth due to the coronavirus pandemic, according to the World Bank on Monday.

The bank announced that specific growth forecasts were difficult due to the uncertainty of the situation however, it says estimates are between 2.1% to 0.5% lower than that. These were compared to the 5.8% forecasted growth in 2019 in developing countries in the region.

China’s growth is estimated to decelerate to 2.3% in baseline, compared to the 6.1% growth in 2019.

The World Bank said that countries in the region should invest in healthcare and impose needed fiscal measures, including subsidies for sick pay and healthcare, to ease the impact of the pandemic.

A faster containment of the virus would lead to faster economic recoveries, the world bank added.

The virus outbreak threatens to plunge more people into poverty. Earlier figures forecasted almost 35 million people to escape poverty across the region in 2020, with 25 million belonging to China alone. The new forecast indicated that 24 million fewer would escape poverty due to the pandemic, with a potential increase of 11 million in poverty if the economic situation further worsened.

Other than fiscal stimulus, countries in the region should give focus to international cooperation to increase supply of medical supplies and services, and guarantee financial stability after the crisis.

Countries should also aid households in their consumption by easing credit and help firms survive the economic decline.

Victoria Kwakwa, vice president for East Asia and the Pacific at the World Bank said that countries in the region must act fast.