World Bank: poverty to increase because of novel coronavirus
In the worst-case scenario, the poor will increase by 11 million in in Asia-Pacific region. Some 35 million were expected to be lifted out of poverty before the pandemic struck, 25 million in China alone. Now regional growth is set to slow to 2.1 per cent or contract by 0.5 per cent if the pandemic gets worse. The region’s countries should coordinate their action and invest in healthcare to overcome the crisis.
Hong Kong (AsiaNews) – The coronavirus pandemic is likely to create millions of new poor in the Asia-Pacific region, with 24 million fewer people escaping poverty, a World Bank report indicates.
In the worst-case scenario, with the pandemic worsening, the number of poor people (those who earn less than US.50 a day) will increase by 11 million in 2020. According to pre-coronavirus estimates, 35 million would have been lifted out of poverty, 25 million in China alone.
The epidemic is driving the countries of the region towards a recession. This year, GDP growth in the East Asia-Pacific region will slow down to 2.1 per cent; in 2019 it was estimated at 5.8 per cent. In the worst-case scenario, regional GDP will contract by 0.5 per cent.
The economic growth of China, the world’s factory, will slow down to 2.3 per cent (in 2019 it was 6.1 per cent); 0.1 per cent if the COVID-19’s recessionary effects are not quickly mitigated.
The disruption of Chinese production in January and February and the difficult restart in recent weeks sent a first shock along the global value chain, damaging the economic prospects of Asian countries.
The outbreak of the crisis in Europe and the United States could have worse repercussions. Without demand for goods from the West, Asian countries will struggle to regain ground.
Tourism is one of the most affected sectors. Countries like Thailand and the Pacific islands are particularly vulnerable. In the manufacturing sector, Cambodia and Vietnam are the most exposed.
To address and overcome the impending economic crisis, the World Bank suggests that the countries in the region coordinate their macroeconomic policies.
Targeted funding in the health sector will need to be provided, including sick pay.
Households and businesses must be able to access bank loans quickly and easily in order to encourage consumption and jumpstart production.