This is the worst growth performance in almost 60 years, including during the Global Financial Crisis and the Asian Financial Crisis, a report stated.
Asia is expected to witness zero per cent growth in 2020 due to the COVID-19 pandemic, its worst growth performance in almost 60 years, but still the world’s largest and most populous continent is likely to fare better than other regions in terms of activity, the International Monetary Fund (IMF) has said.
The IMF, in a blog titled ‘COVID-19 Pandemic and the Asia-Pacific Region: Lowest Growth Since the 1960s’ further said the impact of the pandemic on the region will be “severe and unprecedented“.
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“Growth in Asia is expected to stall at zero per cent in 2020. This is the worst growth performance in almost 60 years, including during the Global Financial Crisis (4.7%) and the Asian Financial Crisis (1.3%),” it said.
It further noted that “Asia still looks to fare better than other regions in terms of activity”.
The global economy is expected to contract in 2020 by 3% — the worst recession since the Great Depression — the IMF said, adding that Asia’s key trading partners are expected to contract sharply, including the United States by 6 % and Europe by 6.6 %.
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It pointed out that COVID-19 crisis is expected to inflict ‘steep decline’ in output across Asia.
According to IMF, China’s growth is projected to decline from 6.1% in 2019 to 1.2% in 2020.
“This sharply contrasts with China’s growth performance during the Global Financial Crisis, which was little changed at 9.4% in 2009, thanks to the important fiscal stimulus of about 8% of GDP.
“We cannot expect that magnitude of stimulus this time, and China won’t help Asia’s growth as it did in 2009,” it said.
Downward revisions are substantial, ranging from 3.5 percentage points in the case of Korea — which appears to have managed to slow the spread of the coronavirus while minimizing prolonged production shutdowns — to over 9 percentage points in the case of Australia, Thailand and New Zealand — all hit by the global tourism slowdown, and in the case of Australia by lower commodity prices, the IMF said.
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Noting that this is a crisis like no other, the IMF said it requires a “comprehensive and coordinated” policy response.
“The first priority is to support and protect the health sector to contain the virus and introduce measures that slow the contagion. If there is not enough space within countries’ budgets, they will need to re-prioritize other spending,” it said.
Observing that the pandemic is also affecting financial markets and how they function, the IMF suggested, “Monetary policy should be used wisely to provide ample liquidity, ease financial stress of industries and small and medium-sized enterprises, and, if necessary, relax macro prudential regulations temporarily.”
The IMF on Tuesday projected a GDP growth of 1.9% for India in 2020. With this subdued forecast, India is likely to record its worst growth performance since the 1991 liberalisation.
However, the International Monetary Fund, in its latest edition of the World Economy report, has placed India as the fastest-growing emerging economies of the world.
India is among the only two major countries, which will register a positive growth rate in 2020. The other being China, for which the IMF has projected a growth rate of 1.2%.
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