{
  "title": "Divergent Recoveries in Asia: History is not Destiny",
  "publication": "IMF Blog, February 23, 2021",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2021/02/23/blog-divergent-recoveries-in-asia",
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  "summary": "Asian economies are performing better than expected.",
  "sections": [
    {
      "heading": "Overview and key statistics",
      "content": "- Authors: Davide Furceri, Jonathan D. Ostry, Anthony C.K. Tan\n- Date: February 23, 2021\n- IMF’s World Economic Outlook Update: upgraded 2020 growth estimate by 0.7 percentage point from October forecast to a contraction of 1.5 percent.\n- Projected regional output growth:\n  - 2021: 7.3 percent\n  - 2022: 5.3 percent\n- Range of cumulative output losses (relative to pre-pandemic trajectory):\n  - Close to zero in China, Japan, and Taiwan PoC\n  - More than 20 percentage points in the Philippines\n  - Even 30 points in East Timor\n- Reference baseline for divergence comparison: IMF’s pre-pandemic (October 2019) forecasts and current cumulative GDP growth projections for 2020, 2021, and 2022."
    },
    {
      "heading": "Findings — why recoveries diverge",
      "content": "- Health factors\n  - Early and stringent containment measures (examples: Australia, Vietnam) helped flatten the pandemic curve, avoid overwhelming medical systems, reduce fatalities, and lay the foundation for recovery.\n  - Rollback of containment only after outbreak stabilization and strong testing/tracing regimes (examples: China, Korea) boosted confidence and supported stronger rebounds.\n- Magnitude and effectiveness of policy support\n  - Extensive monetary and fiscal support mitigated economic effects of containment (notable: Japan, New Zealand).\n  - Targeted fiscal measures (examples: consumption coupons in Korea; cash transfers to casual workers in Australia) supported incomes, reduced infections, and enabled higher medium-term growth.\n- Economic structure and sectoral dependence\n  - Heavy dependence on tourism and contact-intensive services amplified losses; tourism suffered most.\n  - Informal and migrant workers, particularly women and youth, were disproportionately affected due to diminished opportunities and limited social safety nets.\n  - Countries highly reliant on tourism (examples: Pacific islands, Cambodia, the Philippines, Thailand) experienced stronger negative impacts.\n- Other structural factors\n  - High informality, concentrated economic activity, weak transportation infrastructure, limited health sector capacity, and poverty complicated containment enforcement and targeted support (example: Philippines, with high concentration in the Manila metropolitan area)."
    },
    {
      "heading": "Implications and scarring",
      "content": "- Despite early recoveries in parts of Asia-Pacific, aggregate output losses from the pandemic remain significant even under projected rebounds.\n- Labor market deterioration: weakened labor force participation and diminished job prospects for youth and women indicate likely significant scarring.\n- Divergence is especially sobering for Pacific islands and other low-income countries, where lives and livelihoods depend on additional international support."
    },
    {
      "heading": "Policy priorities — the way forward",
      "content": "- Vaccine access and therapies\n  - Ensure vaccines are widely available to end the pandemic everywhere.\n  - Speedy distribution and availability of effective therapies are key to stronger consumption, investment, and employment recoveries.\n  - Support to developing countries in funding, logistics, and administration is crucial to close gaps between developing and advanced economies.\n- Continued support for workers and businesses\n  - Policies should continue until recovery is entrenched and private domestic demand is self-sustaining.\n  - High uncertainty warrants a slower withdrawal of support while remaining vigilant about debt sustainability and financial sector risks.\n- Economic transformation and reallocation\n  - Stimulate private sector demand as containment eases; replace broad sectoral assistance with measures that build greener, more inclusive, resilient, and digital economies.\n  - Use “trampoline” policies (job counseling and retraining) alongside safety nets to protect the most vulnerable and encourage reallocation.\n- International financial support and cooperation\n  - Financial assistance from the international community is needed to reverse divergence between rich and poor countries.\n  - Many low-income economies, including Pacific island countries, will require financial assistance for the foreseeable future.\n  - Global cooperation via the G-20 Common Framework can help clear a path for countries to restructure unsustainable debt and grow.\n\nIMF Blog — “Divergent Recoveries in Asia: History is not Destiny” — February 23, 2021\n\n---\n\n\n References\n\n- World Economic Outlook Update\n- October\n- fatalities\n- targeted support\n\nSource: https://www.imf.org/en/blogs/articles/2021/02/23/blog-divergent-recoveries-in-asia"
    }
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    "Authors: Davide Furceri, Jonathan D Ostry, Anthony CK Tan",
    "Published: February 23, 2021",
    "Authors: Davide Furceri, Jonathan D. Ostry, Anthony C.K. Tan",
    "Date: February 23, 2021",
    "IMF’s World Economic Outlook Update: upgraded 2020 growth estimate by 0.7 percentage point from October forecast to a contraction of 1.5 percent.",
    "Projected regional output growth:",
    "Range of cumulative output losses (relative to pre-pandemic trajectory):",
    "Reference baseline for divergence comparison: IMF’s pre-pandemic (October 2019) forecasts and current cumulative GDP growth projections for 2020, 2021, and 2022.",
    "Health factors",
    "Magnitude and effectiveness of policy support",
    "Economic structure and sectoral dependence",
    "Other structural factors",
    "Despite early recoveries in parts of Asia-Pacific, aggregate output losses from the pandemic remain significant even under projected rebounds.",
    "Labor market deterioration: weakened labor force participation and diminished job prospects for youth and women indicate likely significant scarring.",
    "Divergence is especially sobering for Pacific islands and other low-income countries, where lives and livelihoods depend on additional international support.",
    "Vaccine access and therapies",
    "Continued support for workers and businesses",
    "Economic transformation and reallocation",
    "International financial support and cooperation",
    "[World Economic Outlook Update](https://www.imf.org/en/Publications/WEO/Issues/2021/01/26/2021-world-economic-outlook-update)",
    "[October](https://blogs.imf.org/2020/10/21/engines-not-yet-in-sync-a-multispeed-recovery-in-asia/)",
    "[fatalities](https://blogs.imf.org/2020/06/02/how-the-great-lockdown-saved-lives/)",
    "[targeted support](https://www.imf.org/en/Publications/WP/Issues/2020/10/16/COVID-19-and-Inequality-in-Asia-Breaking-the-Vicious-Cycle-49807)"
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