World Bank warns China growth could screech to a halt
31 March, 2020
The coronavirus pandemic's monetary fallout might lead to China's growth to come quickly to a standstill while driving 11 million more people in East Asia into poverty, the World Bank warned Monday.
The pandemic is creating "an unprecedented global shock, which could bring growth to a halt and may increase poverty over the region," said Aaditya Mattoo, World Bank chief economist for East Asia and the Pacific.
Even in the best-case scenario, the spot will dsicover a sharp drop in growth, with China's expansion slowing to 2.3 percent from 6.1 percent in 2019, according to a report on the pandemic's impact on the region.
With two-fifths of the world's population under some type of lockdown that's caused the shuttering of businesses and a slowdown in transportation to attempt to contain the virus, the united states where in fact the outbreak originated may escape a recession but will however suffer a sharp slowdown.
Just 8 weeks ago, the World Bank's economists forecast China would grow by 5.9 percent this season, which could have been its worst performance since 1990.
Now the world's second-largest economy faces a more dire outlook, reflected in the record contraction in manufacturing activity in February and industrial production that fell for the very first time in 30 years.
The East Asia and Pacific region, excluding China, could see growth slow to at least one 1.3 percent in the baseline or contract 2.8 percent in the more pessimistic scenario in comparison with 5.8 percent this past year, the report said.
"The pandemic is profoundly affecting the region's economies, however the depth and duration of the shock are unusually uncertain," the report said, noting the spot already was unsettled by trade conflict with america.
"Containment of the pandemic would allow recovery, but the threat of durable financial stress is high even beyond 2020," the World Bank warned. "Most vulnerable are countries that rely heavily on trade, tourism, and commodities; that are heavily indebted; and that count on volatile financial flows."
Worsening poverty
Even in the very best case, marked by a sharp slowdown accompanied by a solid recovery, 24 million fewer people in your community will escape poverty, the report said.
But an additional 11 million persons could descend into poverty beneath the more negative outlook, where there's a severe economic contraction followed by a sluggish recovery.
Mattoo said the 17 countries in your community key to global value chains and accounting for 70 percent of world trade "have all been affected" and today have some of the world's highest numbers of COVID-19 cases.
"In this interdependent world where our economic destinies are intertwined, there's going to be mutual amplification, for the reason that shock is simultaneously affecting all these important countries," he told reporters.
"That means it is particularly costly in financial terms."
The World Bank called for strong action, with the priority first on containment but also on measures to cushion the shock to households of lost wages.
Mattoo said it isn't too late to follow Korea's example to ramp up testing and containment to ensure that economies can begin to return to normal quicker.
"This is simply not rocket science. With help even poorer countries can do it."
Source: www.thejakartapost.com
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