- In a rapidly changing environment, making precise growth projections is unusually difficult. Therefore, the report presents both a baseline and a lower-case scenario.
- Growth in the developing EAP region is projected to slow to 2.1 percent in the baseline and to a negative 0.5 in the lower case scenario in 2020, from an estimated 5.8 percent in 2019. Growth in China is projected to decline to 2.3 percent in the baseline and 0.1 percent in the lower case scenario in 2020, from 6.1 percent in 2019.
- Growth in EAP excluding China is projected to slow from 4.7 percent in 2019 to 1.3 percent in the baseline scenario and negative 2.9 in the lower-case scenario in 2020, and is projected to rebound gradually in 2021 as the effects of the virus dissipate.
China has seen a precipitous decline in economic activity.
- In February, the purchasing managers' index fell below the 50-point mark that separates monthly growth from contraction. The fall was sharper and wider than during the great recession, to 36 in manufacturing and 30 in non-manufacturing. Industrial production also registered negative growth for the first time in more than 30 years.
- It remains to be seen whether the government can switch on economic activity as abruptly as it was switched off. Many large industrial enterprises are reported to have resumed production, even though many small and medium enterprises are still struggling. Indirect estimates, such as pollution indicators, show that activity is increasing only gradually in China.
- The report estimates that under the baseline growth scenario, 24 million fewer people will escape poverty across the region in 2020 than would have in the absence of the pandemic (using a poverty line of USD5.50/day).
- If the economic situation were to deteriorate further, and the lower-case scenario prevails, then poverty is estimated to increase by about 11 million people.
- Prior projections estimated that 35 million people would escape poverty in the region in 2020, including over 25 million in China alone.
- These sectors include tourism and retail in Thailand, and manufacturing and textiles in Vietnam
- Informal workers in all countries are especially likely to suffer and will be the hardest to help.
Financial systems across the region remain vulnerable to external shocks, especially in countries with high private sector debt.
- The rate of increase in China, Indonesia, Malaysia, Philippines, and Thailand (EAP-5) debt has been much faster than the rate of increase for the rest of the world so that EAP-5 share of total global debt increased from 3.4 percent in 2005 to 18 percent in 2019.
Other country-specific circumstances have weighed on the outlook.
- All countries in the region sharply downgraded their growth forecasts, largely reflecting the effect of the spread of the disease. Country-specific factors, such as droughts (Thailand), and commodity shocks (Malaysia and Mongolia), also weighed on the outlook.
- A worsening in the COVID-19 pandemic and/or more severe/prolonged travel restrictions would have further negative impacts on tourism activity.
Due to the COVID-19 pandemic, economic circumstances within countries and regions are fluid and change on a day-by-day basis. The analysis in this report is based on the latest country-level data available as of March 27.
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