Asia’s economic contraction this year will be worse than previously thought as several emerging markets in the region have slowed down sharply while battling the coronavirus outbreak, the International Monetary Fund said on Wednesday.
Asia is forecast to shrink by 2.2 per cent this year, the IMF said in its latest Regional Economic Outlook report for Asia and Pacific. That’s worse than the fund’s June forecast for a 1.6 per cent contraction, and stands in contrast to the IMF’s decision to revise upward the projection for the global economy.
The IMF said the downgrade for Asia’s economy “reflects a sharper contraction, notably in India, the Philippines, and Malaysia.” It added that India and the Philippines experienced a “particularly sharp” drop in economic activity in the second quarter, “given the continued rise in virus cases and extended lockdowns.”
Here’s the fund’s forecast for the three economies:
- India is expected to shrink by 10.3 per cent in the fiscal year ending March 31, 2021. That’s worse than the 4.5 per cent contraction forecast in June.
- The Philippine economy is forecast to contract 8.3 per cent in the calendar year 2020, much more than the 3.6 per cent contraction projected in June.
- Malaysia will likely shrink by 6 per cent this year, worse than the IMF’s June forecast of a 3.8 per cent contraction.
China bucks the trend
Not all Asian economies had their forecast downgraded. Economic activity in the region is moving at “multiple speeds,” with China — the first country to report cases of Covid-19 — leading the recovery, the IMF said.
China is one of the few Asian economies expected to grow this year. The fund upgraded its 2020 growth forecast for the Asian giant to 1.9 per cent from its June projection of 1 per cent because of “a faster-than-expected rebound in the second quarter.”
