The World Bank has predicted the current coronavirus pandemic to take a major toll on the economies of China and other countries in Southeast Asia.
In its latest report entitled ‘World Bank East Asia and Pacific Economic Update April 2020,’ the bank has projected growth in the developing East Asia Pacific (EAP) region to slow from an estimated 5.8 per cent in 2019 to 2.1 per cent, in a scenario where the economy recovers from the pandemic.
However, in the worst case scenario, if the pandemic begins in 2021, the growth will be 0.5pc negative.
Meanwhile, China’s growth is expected to fall from 6.1pc in 2019 to 2.3pc in the best-case scenario, and 0.1pc in the worst-case scenario in 2020.
Whereas EAP growth outside China is projected to slow from 4.7pc in 2019 to 1.3pc in the best-case scenario and negative 2.9pc in the worst-case scenario in 2020, and is projected to slowly recover as the virus’ effects reduce in 2021.
“Containment of the pandemic would allow recovery, but the risk of durable financial stress is high even beyond 2020. Most vulnerable are countries that have poor disease control and prevention systems; that rely heavily on trade, tourism, and commodities; that are heavily indebted; and that rely on volatile financial flows,” says the report.
The study said a COVID-19 shock would also significantly impact poverty reduction across the country.
The study predicts that 24 million fewer people will escape poverty across the world in 2020 in the best-case development scenario than they would otherwise have in the absence of the pandemic.
However, if the economic situation deteriorates further, and the worst-case scenario prevails, then it is projected that poverty will rise by about 11 million people.
The report said prior estimates projected that 35 million people in the world would escape poverty by 2020, including more than 25 million in China only.