The COVID-19 pandemic will shrink the global economy by 5.2 per cent this year, representing the deepest recession since World War Two, and triggering a dramatic rise in extreme poverty, the World Bank said Monday in its latest Global Economic Prospects report.
Emerging market and developing economies are due to shrink by 2.5 per cent – their first contraction as a group in at least 60 years. Per capita incomes, meanwhile, are forecast to fall by 3.6 per cent – tipping millions into extreme poverty.
Per-capita output will contract in more than 90% of countries, the biggest share since 1870. This decline may push 70 million to 100 million people into extreme poverty, Ceyla Pazarbazioglu, the World Bank’s vice president of equitable growth, finance and institutions, told reporters by phone.
Emerging and developing economies will shrink 2.5%, their worst performance in data that starts in 1960, it said.
Growth in the region is projected to fall to 0.5% in 2020, the lowest rate since 1967
The East Asia and Pacific regional economy has been affected by the COVID-19 pandemic through both domestic and external channels.
Growth in the region is projected to fall to 0.5% in 2020, the lowest rate since 1967, reflecting disruptions caused by the pandemic. China is expected to slow to 1% this year and rebound to 6.9 percent in 2021 as activity gradually normalizes there and as lockdowns are lifted around the world.
The outlook is predicated on China and other major countries in the region avoiding a second wave of outbreaks. The assumption is that the severe slowdown in China in the first quarter and the rest of the region in the first half will be followed by a gradual and sustained recovery.
Thailand (-5%) and Malaysia (-3.1%) are forecast to experience the biggest contractions this year
Economic activity in the rest of East Asia and Pacific is forecast to contract by 1.2% in 2020 before rebounding to 5.4% in 2021.
Among major economies of the region, Malaysia (-3.1%), the Philippines (-1.9%), and Thailand (-5%) are forecast to experience the biggest contractions this year. This reflects domestic shutdowns, reduced tourism, disrupted trade and manufacturing, and spillovers from financial markets.
Indonesia’s economic activity is anticipated to be flat in 2020 while Vietnam’s growth is forecast to slow to 2.8%. While not contractions, these growth rates would nevertheless be 5.1 percentage points and 3.7 percentage points lower than January forecasts.
Thailand relaxes COVID-19 measures to help revive economy
During the past couple weeks, new infection cases have been down from roughly 20,000 daily cases to 17,000 -19,000. Moreover, the number of daily discharges is exceeding infections, which has led to the conclusion that the situation is improving.
Thailand relaxed more virus related social curbs on September 1st, in dozens of cities including Bangkok, in a move that may indicate that the country’s economy, hit hard by COVID-19 will soon revive, lead by the export sector and sound financial fundamentals.(more…)
Southeast Asia to relinquish its lead over Latin America says Moody’s
While the emerging economies of Southeast Asia have outperformed their counterparts in Latin America for most of the past two decades, their lead will slide in the next few quarters as Southeast Asian governments clamp down to fight the pandemic’s lingering second and third waves.
The Delta surge is casting larger clouds over the global recovery and emerging markets are in the thick of it. Despite the ebbing of the coronavirus variant in India, where it first emerged, its spread in Southeast Asia, Africa, and the Middle East has steepened the road to recovery in these regions.(more…)
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