Economic recovery in East Asia and the Pacific recedes, says World Bank

The recovery of the East Asia and Pacific region has been compromised by the spread of the COVID-19 Delta variant, prolonging distress for businesses and households and likely slowing economic growth and increasing inequality, the world Bank said recently. Economic activity started to slow in the second quarter of 2021 and growth forecasts have been revised downwards for most countries in the region.

While China’s economy Expected to grow 8.5%, the rest of the region is expected to grow 2.5%, almost 2 percentage points lower than forecast in April 2021, according to the World Bank’s economic update for Asia of the East and the Pacific in the fall of 2021.

Employment rates and labor force participation have fallen, and up to 24 million people will be unable to escape poverty in 2021.

The recovery in East Asia and the Pacific has been compromised by the spread of the COVID-19 Delta variant, prolonging distress for businesses and households and likely slowing economic growth and increasing inequality, the World Bank said . Economic activity started to slow in the second quarter of 2021 and growth forecasts have been revised downwards for most countries.

“The economic recovery of developing countries in East Asia and the Pacific faces a setback,” said Manuela Ferro, World Bank vice president for East Asia and the Pacific .

“While in 2020 the region contained COVID-19 while other regions of the world struggled, the increase in COVID-19 cases in 2021 has reduced the growth outlook for 2021. However, the region is Stronger exit from crises before and with the right policies could start again, ”she added.

The damage from the resurgence and persistence of COVID-19 has the potential to hurt growth and increase inequality in the long run, according to the update.

Failure of otherwise viable firms results in the loss of valuable intangible assets, while surviving firms postpone productive investment. Small businesses have been hit the hardest. While most businesses have struggled, larger companies are likely to experience smaller sales declines and more likely to adopt sophisticated technologies and receive government support.

Households suffered, especially the poorest, who were more likely to lose income, suffer from greater food insecurity, have children who do not engage in learning and sell in scarce asset disaster. The increase in stunting, erosion of human capital and the resulting loss of productive assets will affect the future incomes of these households. Increasing inequalities between firms could also increase inequalities between workers.

“Vaccination and accelerated testing to control COVID-19 infections could revive economic activity in struggling countries as early as the first half of 2022 and double their growth rate next year,” the chief economist said from East Asia and the Pacific Aaditya Mattoo. “But in the longer term, only deeper reforms can prevent slower growth and increased inequality, an impoverishing combination that the region has not experienced in this century,” he added.

The report estimates that most countries in the region, including Indonesia and the Philippines, will be able to immunize more than 60% of their population by the first half of 2022. While this would not eliminate infections, it would would significantly reduce mortality, allowing a resumption of economic activity.

However, the region will need to make serious efforts on four fronts to deal with a protracted COVID: tackling vaccine hesitancy and distribution capacity limitations to avoid a cap in coverage; improve testing, tracing and isolation to control infections; increasing regional vaccine production to reduce reliance on imported supplies; and strengthening health systems to cope with the protracted presence of the disease.

International assistance is needed to support national efforts in all of these areas, especially in countries with limited capacity, the update adds.

Fibre2Fashion Information Office (DS)


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