Asian economies will see their growth come to a halt this year amid the coronavirus pandemic, IMF warns

Associated Press

Tourists practice social distancing as they wait to extend their visa at Immigration Bureau in Bangkok, Thailand, Friday, March 27, 2020. Tourists across Asia are finding their dream vacations have turned into travel nightmares as airlines cancel flights and countries close their borders in the fight against the coronavirus pandemic. (AP Photo/Sakchai Lalit)

• The IMF warned on Wednesday that Asian economies will see no growth in 2020
• China is the only country expected to grow at 1.2% in 2020
• The predictions put Asia-Pacific to grow by the lowest amount since the 1960s

Asia will face no economic growth in 2020 and face its worst growth performance in almost 60 years, the International Monetary Fund (IMF) warned on Wednesday.

Chang Yong Rhee, director of the IMF's Asia and Pacific department wrote in a blogpost on Thursday: "This is a crisis like no other. It is worse than the Global Financial Crisis, and Asia is not immune."

If the predictions come true this will put the region at worse growth than levels seen during both the global Financial Crisis of 2008 and the Asian Financial Crisis.

The Asian Financial Crisis began in 1997 when Thailand decided to no longer peg its currency to the US dollar. Currency declines and economic upheaval rippled across much of East Asia. International stocks fell as much as 60%, prompting interventions from the IMF and the World Bank. The impact of the crisis was also felt in nations such as the US, Russia and Europe.

Rhee added: "While there is huge uncertainty about 2020 growth prospects, and even more so about the 2021 outlook, the impact of the coronavirus on the region will-across the board-be severe and unprecedented."

The predictions affirms the economic fallout that is occurring as a result of the novelty coronavirus pandemic.

At the time of writing, coronavirus- which causes a disease called COVID-19- has infected more than 2 million people and killed more than 137,000 people.

The research will be a blow to many economies who were hoping to recover as countries begin to ease lockdowns.

Double slowdown

The research also predicts the global economy will shrink by 3% in 2020. Growth in the US is expected to fall by 6%, while Europe's economy is expecting to contract by 6.6%.

But China's economy will likely grow in 2020, but by just 1.2%, compared to 6.1% in 2019.

Even during the Global Financial Crisis, China was able to record 9.4% growth.

The IMF has previously warned that the global economy is going to face a severe recession that is worse since the Great Depression of the 1930s.

The IMF called for a comprehensive and coordinated policy response.

"The first priority is to support and protect the health sector to contain the virus and introduce measures that slow contagion. If there is not enough space within countries' budgets, they will need to re-prioritize other spending," Rhee said.

Monetary policies should be used to provide ample liquidity, ease financial stress of industries and to reduce macroprudential regulations.

Central banks across Asia have engaged in various monetary policy efforts, including buying government bonds to prevent their economies from collapsing during the ongoing covid crisis.

But the IMF warned that this may not be enough with central banks soon having to use their balance sheets more "flexibly" and aggressively support "small and medium-sized enterprises through risk-sharing with the government".

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