International Monetary Fund said on Thursday that due to coronavirus outbreak Asia’s economic growth is said to experience huge downfall for the first time in 60 years.
“Policymakers must offer targeted support to households and firms hardest-hit by travel bans, social distancing policies and other measures aimed at containing the pandemic,” said Changyong Rhee, director of the IMF’s Asia and Pacific Department.
“These are highly uncertain and challenging times for the global economy. The Asia-Pacific region is no exception. The impact of the coronavirus on the region will be severe, across the board, and unprecedented,” he told a virtual news briefing conducted with live webcast.
“This is not a time for business as usual. Asian countries need to use all policy instruments in
their tool kits.” Asia’s economy is likely to suffer zero growth this year for the first time in 60 years, the IMF said in a report on the Asia-Pacific region released on Thursday.
“While Asia is set to fare better than other regions suffering economic contractions, the projection is worse than the 4.7% average growth rates throughout the global financial crisis, and the 1.3% increase during the Asian financial crisis in the late 1990s,” the IMF said.
On the assumption that containment policies succeed, the IMF expects expansion in Asian economic growth next year, but it also added that the outlook was highly uncertain.
The IMF Said that the pandemic is directly hitting the region’s service sector by forcing the households to stay at home and shops to shut down, unlike the global financial crisis triggered by 2008 collapse of Lehman Brothers.
IMF’s January forecast said that China’s economy is expected to experience growth of 6 per cent, but after the coronavirus outbreak the growth is lowered by 1.2 per cent growth.
“Chinese policymakers have reacted very strongly to the outbreak of the crisis. If the situation becomes aggravated, they have more room to use fiscal, monetary policies,” Rhee said. “Whether that would be needed will really depend on progress in containing the virus,” the IMF said.
IMF said households and firms hit hardest by the pandemic may expect targeted support by Asian policymakers and provide ample liquidity to markets and see financial stress faced by small and midsize firms.
