The World Bank warned in an economic update on Monday, March 30, 2020, that the coronavirus pandemic would hit hard on countries of East Asia and the Pacific region and these countries are likely to experience a sharp slow growth in the coming years.
Among these developing economies of the regions, China, the country wherein the coronavirus outbreak has started, would be facing harsh impact on its financial conditions.
Financial Impact on East Asia and the Pacific
Analysts explained that it would be a difficult task to project precise growth forecasts of the given countries since the situations of the virus pandemic changed rapidly. Considering the baseline of the virus impact on economies, the bank, however, forecasted that the growth in developing economies in the region would slow down to 2.1% in 2020, and to -0.5% in a lower-case scenario, as compared to the estimated growth of 5.8% in 2019.
The bank also projected that China, the country which has been facing the coronavirus outbreak since late December, would witness a slow growth of its economy to 2.3% in the baseline scenario, or as low as 0.1% in the lower-case scenario, as compared to the expected growth rate of 6.1% in 2019.
As per the report of the bank, the region has faced an unusual combination of “disruptive and mutually reinforcing events,” adding that therefore, a “significant economic pain seems unavoidable in all countries” of the region.
A source reported that if there is a further escalation of the virus cases in the region, the economic situations of the countries would be devastated and would increase the level of poverty in the region by about 11 million people. The bank precisely explained the situation, “Containment of the pandemic would allow for a sustained recovery in the region, although risks to the outlook from financial market stress would remain high.”
World Bank’s Advice
The World Bank has issued some key advice to the governments of the region and urged them to take several certain initiatives to control the financial slowdown in the future. The World Bank emphasized that the governments should improve their healthcare system and capacity including providing subsidies for sick pay and healthcare, to mitigate some of the immediate impacts of the pandemic.
The bank also advised that the financial institutions or lenders of the countries must ease facilitating credit to people to support their households’ consumption and also to avoid the immediate shock of the outbreak.
Apart from the advice for domestic policy to tackle the virus crisis, the bank urged that countries should establish deeper international cooperation and new cross-border public-private partnerships to increase the production and supply of key medical supplies and services, and ensure financial stability in the aftermath of the crisis.
Victoria Kwakwa, the Vice President for East Asia and the Pacific at the World Bank, described, “The good news is that the region has strengths it can tap, but countries will have to act fast and at a scale not previously imagined.”
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