The World Bank, in an economic update, opined that the pandemic is likely to pull down the growth of East Asia and the Pacific as well as China to the slowest in more than 50 years.
The US-based bank said that this year the region is estimated to have growth of only 0.9% which is the lowest rate since 1927.
With the increase in government spending, exports and decrease in COVID-19 active cases since March, China was expected to have 2 percent economic growth this year but due to low domestic consumption, the country couldn’t meet the estimation. The rest of the East Asia and Pacific region is calculated to see a 3.5 percent contraction, the World Bank said.
East Asia and the Pacific economy, which mainly depend on trade and tourism, had to confront this increased domestic difficulties due to the global recession that occurred as a result of the pandemic. Also, the efforts by nations to control the spread of infection led to a noticeable reduction in economic activities.
The World Bank said that the region has to concentrate on altering financial policies to organize the revenue and overcome the fiscal and economic impact created by the pandemic. Meanwhile, social protection programs are recommended to coordinate the workers back into the system.
“Countries with well-functioning social protection programs and good implementation infrastructure, pre-COVID-19, have been able to scale up more quickly during the pandemic,” said World Bank.
The economic shock created due to strict lockdown measures and other movement restrictions could expand the poverty level from 33 million to 38 million people with a daily income of $5.50. The bank says 33 million people would have overcome poverty if COVID-19 had not happened but now they will remain in the same economic condition this year.
The region has faced an unexpected set of challenges, but there are smart policy options available that can reduce the impact of this situation like investing in testing and tracing capacity and constantly improving social protection for the poor and the informal sector, says Victoria Kwakwa, vice-president for East Asia and the Pacific at the World Bank.