BANGKOK -- The author of a new World Bank report warned on Tuesday that developing Asia faces the prospect of a "third shock" to follow the trade war and new coronavirus outbreak.
The relentless spread of COVID-19 could devastate economic growth and increase poverty across the region for the first time in a generation, the bank said in a new report on the region's response to the pandemic.
The shock could cripple the financial sector and capital markets -- vital sources of liquidity for reviving industries and other sectors devastated by the impact of the virus -- and governments will have to make "extraordinary responses, the report warned.
Aaditya Mattoo, the World Bank's chief economist for East Asia and the Pacific and lead author of the report, told Nikkei Asian Review that the coronavirus crisis is hitting all countries simultaneously, unlike previous country-specific shocks such as natural and financial disasters.
Southeast Asia is particularly vulnerable as it was just recovering from global trade friction and is now struggling to contain a viral disease, Mattoo said. "This exceptional shock needs an exceptional response: bold national action, deeper international cooperation, and high levels of external assistance."
The report forecasts significant declines in growth across the region in both baseline and "lower" case scenarios.
In developing countries, the World Bank projects annual growth this year to slow to 2.1% in its baseline scenario and to minus 0.5% in a lower case scenario -- down from an estimated 5.8% expansion in 2019.
Reade more: Nikkei Asian Review
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