“This is a crisis like no other. It is worse than the Global Financial Crisis, and Asia is not immune,” Chang Yong Rhee, director of the Asia and Pacific Department at the IMF, wrote in a blog post published on Wednesday.
“While there is huge uncertainty about 2020 growth prospects, and even more so about the 2021 outlook, the impact of the coronavirus on the region will — across the board — be severe and unprecedented,” he added.
Asia has been among the fastest-growing regions in the world. During previous crises such as the Asian financial crisis in 1997 and the global financial crisis around 2008-2009, the region still registered average growth rates of 1.3% and 4.7%, respectively, said the fund.
But the coronavirus pandemic, which has infected more than 2 million people and killed over 130,000, has halted much of global economic activity as authorities lock down countries and cities to stem the fast-spreading disease.
The IMF on Tuesday said the global economy is expected to shrink by 3% this year. The economies of Asia’s largest trading partners are expected to experience deep contractions: The U.S. is projected to shrink by 5.9%, while the euro area as a whole is forecast to contract 7.5%.
China is one of the few economies poised to grow in 2020, according to the fund’s projections. But the IMF’s 1.2% growth forecast for the country is a sharp slowdown from China’s economic performance in previous years.
“This sharply contrasts with China’s growth performance during the Global Financial Crisis, which was little changed at 9.4 percent in 2009 thanks to the important fiscal stimulus of about 8 percent of GDP,” Rhee wrote, referring to gross domestic product, which is a broad measure of the size of an economy.
“We cannot expect that magnitude of stimulus this time, and China won’t help Asia’s growth as it did in 2009,” he added.
As a result of that, the fund has made “substantial” downward revisions in its forecasts for Asian economies, said Chang. Here are some of those projections, according to prepared remarks by Rhee planned for a press conference in Washington D.C.:
Still, Asia “looks to fare better than other regions in terms of activity,” Rhee wrote in the blog post. He said growth in the region could rebound strongly in 2021 if measures to contain the virus and stimulus to support the economy work.
“But there is no room for complacency,” he said.
“The region is experiencing different stages of the pandemic. China’s economy is beginning to get back to work, other economies are imposing tighter lockdowns, and some are experiencing a second wave of virus infections. Much depends on the spread of the virus and on how policies respond.”