US, WASHINGTON (ORDO NEWS) — “Developing countries in East Asia and the Pacific (APR), recovering from trade tensions and struggling with COVID-19, are now facing the prospect of a global financial shock and recession,” says a new World Bank survey.
The international lender has revised its estimates of the economic growth of countries in the region. WB experts suggest that GDP growth in the Asia-Pacific region in 2020 will be 2.1% compared to 5.8% growth in 2019. In the case of the worst case scenario, the indicator may be only 0.5%.
Separately, China’s growth prospects were considered. According to the World Bank, economic growth in the Middle Kingdom will slow down to a record low of 2.3% in the case of the base scenario and up to 0.1% in the worst case scenario. In 2019, the PRC economy grew by 6.1%, which has already become the lowest rate since the beginning of the 1990s.
“The containment of the pandemic will allow for sustainable recovery in the region, although the risks of stressful shocks in the financial market will remain high,” the bank’s review said.
At the same time, economists focus on the potential growth of people who fall below the poverty line (according to the WB, it is at the level of income of $ 5.5 per day per person). If the worst-case scenario is realized, the incomes of 11 million residents of the Asia-Pacific region will sink below this bar.
“Targeted fiscal measures, such as sickness subsidies and health care, will help contain the situation and ensure that temporary deprivation does not lead to long-term loss of human capital,” the authors of the review note.
In addition, the WB recommends that countries in the region review their macroeconomic approaches and position on international trade.
“In addition to decisive domestic action, the most effective vaccine against this dangerous threat should be deeper international cooperation. The countries of East Asia, the Pacific and other regions must fight this disease together, adhere to the principles of open trade and coordinate macroeconomic policies,” the commentary provides in a review. Aditya Mattu, WB Chief Economist for East Asia and the Pacific.
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