HONG KONG/TOKYO – Economic growth in the Asia-Pacific region will likely slow to a standstill in 2020, something that hasn’t happened in the last 60 years, according to the International Monetary Fund.
Changyong Rhee, director of the lender’s Asia and Pacific Department, urged governments in the region to utilize all policy options to support their economies during the coronavirus pandemic, including bilateral and multilateral swap arrangements.
Rhee said 17 countries in the region have expressed interest in the IMF’s two emergency financing instruments — the Rapid Credit Facility and the Rapid Financing Instrument.
The economic blow from coronavirus is shaping up to be far worse than other crises, according to the IMF’s outlook. The Asia-Pacific region grew at an annual average rate of 4.7 percent throughout the Global Financial Crisis, for example, and 1.3 percent during the Asian Financial Crisis.
Capital-flow measures should be considered to ensure external stability, and central bank balance sheets should be used to help small and medium-size businesses, Rhee said in remarks prepared for a virtual news conference during the IMF and World Bank’s annual spring meetings, which are being held remotely from Washington this year.
"This is not a time for business as usual,” Rhee said. "Asian countries need to use all policy instruments in their toolkits. In doing so, policy trade-offs will be inevitable and will depend on policy space.”
On Tuesday, in its first World Economic Outlook report since the pandemic shut major economies, the IMF estimated global gross domestic product will shrink 3 percent this year, down from the 3.3 percent expansion it forecast in January. That would dwarf the 0.1 percent contraction in global GDP in 2009, and likely will mark the deepest dive since the Great Depression nearly a century ago.
"For 2021, there is hope: If containment policies succeed, we will see a rebound in growth,” Rhee said. "However, it is highly uncertain how this year will progress.”
Growth in China and India will decelerate but their economies will still manage to expand 1.2 percent and 1.9 percent respectively, the fund said. Real GDP in Japan is expected to decline by 5.2 percent.
In an online news briefing after his opening remarks, Rhee said Asia will only rebound when there’s a global recovery. Containing the virus will be crucial.
"It would be very difficult to imagine that Asia can recover on its own,” Rhee said.
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