## Navigating the Pandemic: A Multispeed Recovery in Asia

_Asia and Pacific Region, October 21, 2020_

## Source details

**Canonical URL:** [Navigating the Pandemic: A Multispeed Recovery in Asia](https://www.imf.org/en/publications/reo/apac/issues/2020/10/08/regional-economic-outlook-apd)

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## Bibliographic details
- Published: October 21, 2020
- Series: Asia and Pacific Region

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### Regional outlook and growth projections
- Global growth is projected at −4.4 percent in 2020, revised up by 0.6 percentage points since the June 2020 World Economic Outlook (WEO) Update because of better-than-expected second quarter outturns.
- Global growth is projected at 5.2 percent in 2021, 0.3 percentage point lower than projected in June 2020, reflecting the persistence of social distancing into 2021.
- The Asia and Pacific region:
  - Economic activity is expected to contract by −2.2 percent in 2020.
  - Economic activity is expected to grow by 6.9 percent in 2021.
  - These projections are −0.6 percentage point and +0.3 percentage point different, respectively, from the June 2020 WEO Update.

### Multi-speed recovery dynamics and key drivers
- The outlook varies by country depending on:
  - Infection rates and containment measures.
  - The scale and effectiveness of the policy response.
  - Reliance on contact-intensive activities.
  - Reliance on external demand.
- In parts of Asia where virus transmission rates are low, mobility and activity could normalize faster than elsewhere.
- Scarring is likely over the medium term as labor market participation has fallen; output is expected to remain below pre-pandemic trends, with the most vulnerable in society likely to be hit the hardest.
- The recovery is tentative and highly uncertain, with significant downside risks.

### Empirical analysis of containment measures and economic effects
- Analysis uses real-time containment measures implemented by 129 countries (Deb and others 2020a; 2020b) with daily infection and fatality data plus high-frequency indicators of economic activity (for example, NO2 emissions).
- Findings:
  - Containment measures have been effective in flattening the pandemic curve.
  - Very stringent containment measures in New Zealand (international travel ban; early restrictions on gatherings and public events; quick school and workplace closures; stay-at-home orders) are likely to have reduced the number of infections by almost 90 percent relative to a baseline of no containment measures.
  - Containment measures are associated with a strong decline in mobility and were more effective where de facto mobility was curtailed the most, whether from compliance or voluntary social distancing (October 2020 World Economic Outlook, Chapter 2).
  - Flattening the pandemic curve helped prevent medical systems from being overwhelmed, reduced fatalities, and laid the foundation for recovery and medium-term growth (Barro and others 2020).

### Distributional effects and policy implications
- High-frequency labor surveys indicate that inequality is increasing during the COVID-19 pandemic because job losses have been concentrated among low-income workers.
- Experience from past pandemics suggests adverse distributional effects could be larger in the medium term, including displacement of low-skilled workers by robots, which could undermine social cohesion—especially in countries with already high inequality.
- IMF Policy Tracker information shows many Asian governments have implemented significant fiscal policy measures to protect the most vulnerable; the impact depends on:
  - Initial coverage of safety nets.
  - Fiscal space.
  - Degree of informality and digitalization.
- Policy guidance from model-based analysis:
  - Policies targeted to where needs are greatest are effective in mitigating adverse distributional consequences.
  - Targeted policies underpin overall economic activity and support virus containment.
  - There is no one-size-fits-all solution; design must account for country-specific institutional and fiscal constraints.

*Source: Navigating the Pandemic: A Multispeed Recovery in Asia*

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## References

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- [Engines Not Yet in Sync: A Multi-speed Recovery in Asia](https://blogs.imf.org/2020/10/21/engines-not-yet-in-sync-a-multispeed-recovery-in-asia/)

_Source: https://www.imf.org/en/publications/reo/apac/issues/2020/10/08/regional-economic-outlook-apd_