Asia’s economy will shrink more this year due to the slowdown in several markets, according to the International Monetary Fund.
The organization said Asia could shrink by 2.2% in 2020. This is considered worse than the fund’s June prediction for a 1.6% contraction and does not reflect the IMF’s decision to revise upward the global economic forecast.
According to its latest Regional Economic Outlook report for Asia and Pacific, the downgrade for Asia’s economy “reflects a sharper contraction, notably in India, the Philippines, and Malaysia.” Moreover, India and the Philippines experienced a “particularly sharp” drop in economic activity in the second quarter, “given the continued rise in virus cases and extended lockdowns.”
Economic forecast per country
IMF's data suggest that India could fall by 10.3% in the fiscal year ending March 31, 2021, while the Philippine economy could contract 8.3% in the calendar year 2020, much more than the predicted 3.6% contraction in June.
Malaysia is predicted to shrink by 6% this year, worse than the June forecast of a 3.8% contraction.
However, China did not get any forecast downgrade. The Fund even upgraded its 2020 growth prediction for China to 1.9% from its June forecast of 1% because of “a faster-than-expected rebound in the second quarter.”
China is one of the few Asian economies that would experience growth this year. The IMF pointed out that China's economic activity in the region is moving at “multiple speeds,” with the country leading the recovery.
“After hitting a trough in February 2020, China’s growth received a boost from infrastructure, real estate investment, and a surge in exports, mainly of medical and protective equipment, as well as work-from-home-related electronics,” the IMF said in its report.
“This is being followed by a gradual recovery in private non-housing investment and consumption.”
China’s economic growth may soar by 8.2%, based on the fund’s forecast.
China's GDP growth
China reports 4.9% GDP growth for the third quarter of 2020, according to data published by the National Bureau of Statistics.
The figure was up 4.9% from a year ago, making the growth for the first three quarters of 2020 to 0.7% from a year ago.
Economists predict that China's GDP growth of 5.2% in the third quarter, based on an average of estimates gathered by Wind Information, a financial information database.
“Generally speaking, the overall national economy continued the steady recovery and significant results have been delivered in coordinating epidemic prevention and development,” the bureau announced in an English-language release.
“However, we should also be aware that the international environment is still complicated and severe with considerable instabilities and uncertainties, and that we are under great pressure of forestalling epidemic transmissions from abroad and its resurgence at home. The economy is still in the process of recovery and the foundation for sustained recovery needs to be consolidated,” the statement read.
