ISTANBUL

The International Monetary Fund (IMF) said on Wednesday that the economy of the Asia and Pacific region started to recover "tentatively, but at multiple speeds."

The region's economy is expected to contract by 2.2% in 2020 but rebound by 6.9% in 2021, while the global expectations were minus 4.4% for 2020 and 5.2% for 2021, according to a report.

"The forecasts remain highly uncertain, with significant downside risks," it noted.

Warning of the large impact the pandemic has on low-income workers, women, and young people, the report underlined that the fiscal support is important to reduce and limit its economic effects.

"These distributional effects could be even larger in the medium term as robots displace low-skilled workers, and the resulting higher levels of inequality could undermine social cohesion," it added.

On the pandemic period in the Asia and Pacific region, the IMF said many countries have contained the first wave of the disease successfully.

"A small group is still striving to flatten the pandemic curve (India, Indonesia, Philippines), and yet others remain largely free of COVID-19 (most Pacific island countries)," it stressed.

It also noted that economic activity is starting to revive, beginning with China.

"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."

Mentioning India's position in the pandemic, the report highlighted that the economic activity in the country narrowed by 24% on a yearly basis in the second quarter of 2020.

The COVID-19, which originated in China last December, infected millions of people globally and affected several economic activities deeply.

Forecasts

The report's GDP growth expectations were minus 1.7% for 2020 and 8% for 2021 in the Emerging Markets and Developing Economies (EMDEs).

Among EMDE countries, several countries, including Bangladesh (3.8%), Myanmar (2%), China (1.9%), and Vietnam (1.6%) are expected to post positive GDP growths in 2020 despite the pandemic's effects.

The Indian economy is expected to contract deeply by 10.3% this year, and rebound by 8.8% next year.

The Philippines, Thailand, Malaysia, and Sri Lanka were other countries which are expected to post worst GDP drop with 8.3%, 7.1%, 6%, and 4.6%, respectively.

Advanced economies are forecast to narrow by 4.2% in 2020 and grow by 2.9% in 2021.

Among advanced economies, all countries -- except Taiwan -- are expected to see negative growth rates between minus 1.9% (Korea) and minus 52.3% (Macao). Taiwan's GDP is expected to stay at the same level.

Australian and Japanese economies are expected to narrow by 4.2% and 5.3% in 2020, and grow by 3% and 2.3% in 2021 respectively.

Pacific island countries and other small states are expected to see minus 7.5% GDP growth rate in 2020 and positive 4.2% next year.

Among this group, only Nauru and Bhutan's economies are projected to post positive growth with 0.7% and 0.6%, respectively, while Fiji (minus 21%), Maldives (minus 18.6%) and Palau (minus 11.4%) will see the largest decline on their GDP.