Winners and losers amid the “multispeed recovery” . . .
The COVID-19 pandemic has hit the Asia Pacific hard. A new International Monetary Fund (IMF) report indicates that the region is now recovering, albeit at multiple speeds. Asia’s economic contraction this year will be worse than previously thought, forecast to shrink by 2.2 per cent in 2020, according to the IMF’s latest Regional Economic Outlook report for Asia and the Pacific. The IMF said the downgrade for Asia’s economy “reflects a sharper contraction, notably in India, the Philippines, and Malaysia” and sustained troubles in Thailand and Sri Lanka. Meanwhile, the IMF forecasts that China will rebound and grow its economy by 1.9 per cent, while other indicators show that the recession may not be as dire in South Korea and Taiwan.
Asia’s lockdowns worked better, for people and the economy . . .
The IMF report also reviewed lessons learned from lockdowns across the region. It found that “[c]ontainment measures reduced COVID-19 infections by an average of more than 90 per cent in 30 days,” laying the foundations for economic recoveries in Vietnam, Taiwan, and Hong Kong. That lockdown-driven recovery was less apparent in India, the Philippines, Japan, and Canada. On average, Asia Pacific economies responded with lockdowns faster than the rest of the world and had better testing and tracing policies in place (along with fewer cases) when they chose to open up. These factors were found to strongly correlate with the strength of economic recoveries in the region.
Telework wins, but warning signs around automation . . .
The multispeed recovery in the Asia Pacific is also occurring within economies. Employment in teleworkable industries grew by five percentage points across the region, with additional growth in essential service industries. But job losses in social industries and non-teleworkable industries were profound, with employment in both dropping by seven percentage points. The IMF also found that women in the Asia Pacific were pushed out of the labour market at a much higher rate than men and that 18-to-24-year-olds faced the steepest drops in employment. These structural risks to recovery could also be amplified by the tools used in the recovery: the IMF measured the correlation between past pandemics, robot adoption in industries, and economic inequality, and found that inequality increases after post-pandemic automation. This, the IMF warns, is also tied to other IMF calculations showing that inequality after pandemics increases civil disorder.
- International Monetary Fund: Navigating the Pandemic: A Multispeed Recovery in Asia
- South China Morning Post: Coronavirus ‘economic scarring’ a near certainty for Asia-Pacific as IMF trims 2020 forecast
- World Economic Forum: IMF: Everything you need to know about Asia’s ‘multispeed’ recovery