The coronavirus pandemic’s economic fallout could cause China’s growth to come to a virtual standstill and drive 11 million more people in East Asia into poverty, the World Bank warned Monday.
The pandemic 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.
Even in the best-case scenario, the region will see a sharp slowdown, with China’s growth slowing to 2.3 per cent from 6.1 per cent in 2019, according to a report on the pandemic’s impact on the region.
Just two months ago, the World Bank’s economists forecast China would grow by 5.9 percent this year, which would have been its worst performance since 1990.
Now the world’s second-largest economy faces a more dire outlook, reflected in the record contraction in manufacturing activity in February and industrial production that fell for the first time in 30 years.
The East Asia and Pacific region, excluding China, could see growth slow to 1.3 percent in the baseline or contract 2.8 percent in the more pessimistic scenario as compared to 5.8 percent last year, the report said.
“The pandemic is profoundly affecting the region’s economies, but the depth and duration of the shock are unusually uncertain,” the report said, noting the region already was unsettled by trade conflict with the United States.
“Containment of the pandemic would allow recovery, but the risk of durable financial stress is high even beyond 2020,” the World Bank warned. “Most vulnerable are countries that rely heavily on trade, tourism, and commodities; that are heavily indebted; and that rely on volatile financial flows.”
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