Fri, Apr 17, 2020 page10

• IMF expects Asia-Pacific growth to stall

  • Bloomberg
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  Economic growth in the Asia-Pacific region would likely slow to a standstill this year, something that has not happened in the past 60 years, the IMF said.

  Changyong Rhee, director of the lender’s Asia and Pacific Department, urged governments in the region to utilize all policy options to support their economies during the COVID-19 pandemic, including bilateral and multilateral swap arrangements.

  Rhee said that 17 countries in the region have expressed interest in the IMF’s two emergency financing instruments — the Rapid Credit Facility and the Rapid Financing Instrument.

  The economic blow from the effects of the novel coronavirus is shaping up to be far worse than other crises, the IMF’s outlook showed.

  The Asia-Pacific region grew at an annual average rate of 4.7 percent throughout the global financial crisis, for example, and 1.3 percent during the Asian financial crisis.

  Capital-flow measures should be considered to ensure external stability, and central bank balance sheets should be used to help small and medium-sized businesses, Rhee said in remarks prepared for a virtual news conference during the IMF and World Bank’s annual spring meetings, which are being held remotely this year.

  “This is not a time for business as usual,” Rhee said. “Asian countries need to use all policy instruments in their toolkits. In doing so, policy trade-offs will be inevitable and will depend on policy space.”

  On Tuesday, in its first World Economic Outlook report since the pandemic shut major economies, the IMF estimated that global GDP would shrink 3 percent this year, down from the 3.3 percent expansion it forecast in January. That would dwarf the 0.1 percent contraction in global GDP in 2009 and likely would mark the deepest dive since the great depression nearly a century ago.

  “For 2021, there is hope: If containment policies succeed, we will see a rebound in growth,” Rhee said. “However, it is highly uncertain how this year will progress.”

  Growth in China and India would decelerate, but their economies would still expand 1.2 percent and 1.9 percent respectively, the fund said.

  Real GDP in Japan is expected to decline by 5.2 percent.

  Meanwhile, IMF managing director Kristalina Georgieva on Wednesday said that the lending agency is facing huge demand for support from its members during the pandemic.

  An unprecedented 102 of the IMF’s 189 member countries are seeking assistance from the organization, Georgieva said.

  It is prepared to commit its full US$1 trillion in lending capacity to meet the demand, she said.

  “It is a crisis like no other,” Georgieva told reporters, reiterating her agency’s assessment that the global economy is in its worst downturn since the Great Depression of the 1930s.

  Georgieva said that the IMF has already doubled its emergency assistance programs from US$50 billion to US$100 billion.

  At the same time, the agency is preparing to assist to restart economic growth as countries emerge from the crisis.

  “We need to think of the challenges we will face on the other side of this crisis,” she said, adding that there was a likelihood of elevated debt and rising bankruptcies in many nations.

  It is important that the IMF and individual governments put measures in place to deal with those issues, she said.

  Additional reporting by AP
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