On Wednesday, the International Monetary Fund (IMF) released its latest Regional Economic Outlook report for Asia and the Pacific. This report contains interesting details. Let’s have a look at the report to learn more about the situation.
Unfortunately, Asia’s economic contraction this year will be worse than expected. It makes sense as several emerging markets in the region slowed down while battling the coronavirus pandemic. According to the information provided by the International Monetary Fund, it expects Asia’s economy to shrink by 2.2% in 2020. As a reminder, in June the fund expected Asia’s economy to contract by 1.6% in 2020.
Interestingly, the latest economic outlook stands in contrast to the IMF’s decision to revise upward the projection for the global economy. The decision to downgrade its forecast for Asia’s economy reflects a sharper contraction, in several countries. Moreover, India, as well as the Philippines, experienced a particularly sharp drop in economic activity in the second quarter. The coronavirus pandemic and extended lockdowns affect local economies.
Let’s have a look at the forecasts. The International Monetary Fund expects the economy of India to shrink by 10.3% in the fiscal year ending on March 31, 2020. Unfortunately, that’s worse than the 4.5% contraction forecast in June.
Moreover, in the case of the Philippines, the IMF expects the economy to contract by 8.3% in the calendar year 2020. The latest forecast shows the severity of the situation. Also, the economy of Malaysia will likely shrink by 6% in 2020, worse than the IMF’s June forecast of a 3.8% contraction.
Economic outlook and interesting details
Interestingly, the International Monetary Fund changed its forecast for China as well. Moreover, China is one of the few Asian economies expected to grow this year. It is worth mentioning that, the fund upgraded its 2020 growth forecast for the world’s second-largest economy to 1.9% from its June projection of 1%.
The IMF made this decision, as the country’s economy surpassed expectations in the second quarter. Moreover, the fund expects China’s economic growth to pick up to 8.2%.
According to the information taken from the latest Regional Economic Outlook report, Asia’s economy should rebound by 6.9% in 2021. However, the region’s economic output will likely remain below pre-coronavirus levels for some time due to scarring effects. It is not surprising as it will take time to cope with all problems created by the coronavirus pandemic. Governments should join forces to improve the situation in Asia and the Pacific.