Asia is home to many exemplars of small but effective government, countries where sound policies and strong institutions underpin economic stability and robust growth. But during the COVID-19 crisis, many are pursuing expansive macroeconomic interventions and implementing measures that infringe on privacy. They are perched on the edge of a slippery slope.
To be sure, extraordinary times call for extraordinary measures. The COVID-19 pandemic has led to the deepest global recession since World War II, with the International Monetary Fund predicting a 5 percent economic contraction in 2020 and a slow recovery after that. An “L-shaped” depression is a very real possibility.
Asia is no exception. While the Asian Development Bank expects China to achieve positive GDP growth, it predicts that India’s economy will shrink by 9 percent. Developing Asia’s GDP will fall by 0.7 percent — the region’s first contraction since WWII.