Pandemic to keep Asia’s growth at lowest since 1967, warns World Bank

Growth in China was expected to come in at 2% this year, boosted by government spending. (File/AFP)
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Updated 29 September 2020

Pandemic to keep Asia’s growth at lowest since 1967, warns World Bank

  • The bank said the region this year is projected to grow by only 0.9%, the lowest rate since 1967
  • The rest of the East Asia and Pacific region was projected to see a 3.5% contraction

TOKYO: The coronavirus pandemic is expected to lead to the slowest growth in more than 50 years in East Asia and the Pacific as well as China, while up to 38 million people are set to be pushed back into poverty, the World Bank said in an economic update on Monday.
The bank said the region this year is projected to grow by only 0.9%, the lowest rate since 1967.
Growth in China was expected to come in at 2% this year, boosted by government spending, strong exports and a low rate of new coronavirus infections since March, but held back by slow domestic consumption.
The rest of the East Asia and Pacific region was projected to see a 3.5% contraction, the World Bank said.
The pandemic and efforts to contain its spread led to a “significant curtailment” of economic activity, the report said.
“These domestic difficulties were compounded by the pandemic-induced global recession, which hit EAP (East Asia and Pacific) economies that rely on trade and tourism hard,” it said.
Countries in the region may need to pursue fiscal reform to mobilize revenue in response to the economic and financial impact from the pandemic, while social protection programs can help support workers’ integration back into the economy, the Washington, DC-based bank said.
“Countries with well-functioning social protection programs, and good implementation infrastructure, pre-COVID, have been able to scale up more quickly during the pandemic,” it said.
The economic shock of the pandemic was also expected to lead to a jump in poverty, defined as income of $5.50 a day, the bank said, adding that based on past experience and the latest gross domestic product forecasts, poverty could expand by 33 million to 38 million people to see its first rise in 20 years.
The bank said that 33 million people who would have in the absence of the pandemic escaped poverty would remain in it this year.
“The region is confronted with an unprecedented set of challenges,” said Victoria Kwakwa, vice president for East Asia and the Pacific at the World Bank.
“But there are smart policy options available that can soften these tradeoffs — such as investing in testing and tracing capacity and durably expanding social protection to cover the poor and the informal sector.”


China aims for sustained and healthy economic development

Updated 30 October 2020

China aims for sustained and healthy economic development

  • Beijing to let market forces play decisive role in resources allocation, report says

BEIJING: China is targeting sustained and healthy economic development in the five years to 2025, with an emphasis on a higher quality of growth, the Xinhua news agency said on Thursday, citing the ruling Communist Party’s Central Committee.

President Xi Jinping and members of the Central Committee, the largest of the ruling party’s elite decision-making bodies, met behind closed doors from Monday to lay out the 14th five-year plan, a blueprint for economic and social development.

China’s external environment “is getting more complicated,” the agency said, adding, “There is a significant increase in instabilities and uncertainties.”

BACKGROUND

China aims to boost its gross domestic product (GDP) per person to the level of moderately developed countries by 2035, while GDP is due to top 100 trillion yuan ($15 trillion) in 2020.

However, the country’s development was still in a period of important strategic opportunities, despite new challenges, it said.

It added that China aims to boost its gross domestic product (GDP) per person to the level of moderately developed countries by 2035, while GDP is due to top 100 trillion yuan ($15 trillion) in 2020.

China will also deepen reforms and let market forces play a decisive role in resources allocation, the agency said.

China will promote a “dual circulation” model, make self-sufficiency in technology a strategic pillar for development, move to develop and urbanize regions, and combine efforts to expand domestic demand with supply-side reforms, it added.

The “dual circulation” strategy, first proposed by Xi in May, envisages that China’s next phase of development will depend mainly on “domestic circulation” or an internal cycle of production, distribution and consumption, backed by domestic technological innovation.