In an unfavourable scenario, up to 11 million people could be driven into poverty in East Asia and the Pacific, the World Bank warns in a report on the economic fallout of the COVID-19 pandemic, suggesting low wage and informal sector workers fall into the most vulnerable category.
“In a lower-case scenario, you could see contraction for the first time in decades", Aaditya Mattoo, the World Bank's Chief Economist for East Asia and the Pacific, told journalists on Monday (30 March) in a conference call adding that “even if you see growth, thousands of tourism workers in Thailand, garment workers in Cambodia could be pushed below the poverty line".
Meanwhile, under what’s referred to as the “baseline growth scenario”, nearly 24 million fewer people will escape poverty across the region in 2020 than would have been the case if there hadn’t been a sweeping pandemic, with a poverty line of US$5.50 a day. The World Bank's analysis, titled "East Asia and Pacific in the Time of Covid-19" focuses on developing countries and is based on country-level data as of 27 March.
It outlines two different prospects for the region - a "baseline" scenario that projects an overwhelming scale of growth slowdown followed by a strong recovery, and a "lower-case" one - a deeper contraction followed by a sluggish recovery following the coronavirus fallout.
The World Bank has issued a key recommendation that would apply to the economies in question - that is taking an integrated view of containment and macroeconomic policy, rather than viewing them as separate instruments for separate goals, as Mattoo put it.
"Today the priority is containment, but to reach that you can rely not just on social isolation and shutdown, but fiscal measures, like sick pay and health spending, could help attain that goal more effectively", Mattoo noted.
Concerns are now mounting that the global recession that has been brought on by the coronavirus epidemic could spill well into 2021, as social and economic networks are being ruined with businesses struggling to shift to an online format. For instance, the Bank’s report states in black and white that a rebound may not come in the foreseeable future: "Containment of the pandemic would allow recovery, but the risk of durable financial stress is high even beyond 2020," the the World Bank report says.
Independently, the head of the world’s top financial watchdog, the Bank for International Settlements, has issued a stark warning calling for global leaders and central banks to “urgently” boost efforts to give a helping hand to businesses.
According to fresh estimates published by worldometers.info, as many as 786,957 have been confirmed to have contracted the novel virus, including 37,843 deaths, largely in Italy and Spain, where the situation has considerably worsened over the past 24 hours.