World Bank sees outbreak taking a big toll on Asia's economy

The World Bank is estimating that the coronavirus outbreak may cause economic growth to slow significantly this year in China and other East Asian-Pacific countries, throwing millions into poverty.

Under a worse-case scenario, the spot could suffer its sharpest downturn since a devastating currency crisis more than two decades ago, the bank said within an updated forecast.

The bank's report projects that growth in the region would slow to 2.1% this season from 5.8% in 2019 under a “baseline” forecast in which economical recovery takes hold come early july.

But under a worse case, where the adverse effects of the virus spillover into next year, the region’s economy would contract 0.5%, the lender estimates. That could represent the weakest performance for the spot because the 1997-98 Asian currency crisis, which plunged 40% of the world into recession.

A lot more than 11 million people could fall into poverty in the region beneath the worse-case scenario, the lender estimates. That's in stark contrast to its earlier forecast that growth will be sufficient this season to lift 35 million persons out of poverty.

A slowdown of the size being projected by the World Bank for such a crucial the main global economy would have severe effects for the rest of the world. The World Bank said it hasn't finished forecasts for other parts of the world but the other day, International Monetary Fund Managing Director Kristalina Georgieva, said it is clear that the global economy has recently entered a recession that could be as bad or worse compared to the slump after the 2008 financial crisis.

In the World Bank’s base case, China, the world’s second most significant economy, would see growth slow from 6.1% this past year to 2.3% this season. In the worse case scenario, growth in China would come to a near halt with a little 0.1% gain.

In the worse case scenario where in fact the virus keeps disrupting activity for most more months, the negative 0.5% drop for the spot would include monetary declines of 2.3% in Indonesia, 4.6% for Malaysia and 5% for Thailand.

“In addition to bold national actions, deeper international cooperation may be the most effective vaccine from this virulent threat,” said Aaditya Mattoo, chief economist for East Asia and the Pacific at the World Bank.

The World Bank has pledged to provide $14 billion in financial support through a fast-track package to fortify the response of developing countries to the virus and expects to deploy up to $160 billion over another 15 months to safeguard the indegent and vulnerable.

The IMF has said it'll commit if needed its full $1 trillion in lending resources to aid nations hit by the virus.