The World Bank warned Monday Coronavirus pandemic taking huge toll on China’s economy

(AFP)

The coronavirus pandemic's economic fallout could cause China's growth to return to a standstill while driving 11 million more people in East Asia into poverty, the planet Bank warned Monday.

The pandemic is causing "an unprecedented global shock, which could bring growth to a halt and will increase poverty across the region," said Aaditya Mattoo, International Bank for Reconstruction and Development chief economist for East Asia and therefore the Pacific.

Even within the best-case scenario, the region will see a pointy drop by growth, with China's expansion slowing to 2.3 percent from 6.1 percent in 2019, consistent with a report on the pandemic's impact on the region.

With two-fifths of the world's population under some sort of lockdown that's caused the shuttering of companies and a slowdown in transportation to undertake to contain the virus, the country where the outbreak originated may escape a recession but will nonetheless suffer a pointy slowdown.

Just two months ago, the planet Bank's economists forecast China would grow by 5.9 percent this year, which might are its worst performance since 1990.

Now the world's second-largest economy faces a more dire outlook, reflected within the record contraction in manufacturing activity in February and industrial production that fell for the primary time in 30 years.

The East Asia and Pacific region, excluding China, could see growth slow to 1.3 percent within the baseline or contract 2.8 percent within the more pessimistic scenario as compared to five .8 percent last year, the report said.

"The pandemic is profoundly affecting the region's economies, but the depth and duration of the shock are unusually uncertain," the report said, noting the region already was unsettled by trade conflict with the us .

"Containment of the pandemic would allow recovery, but the danger of durable financial stress is high even beyond 2020," the planet Bank warned. "Most vulnerable are countries that rely heavily on trade, tourism, and commodities; that are heavily indebted; which believe volatile financial flows."

Worsening poverty

Even within the best case, marked by a pointy slowdown followed by a robust recovery, 24 million fewer people within the region will escape poverty, the report said.

But a further 11 million people could descend into poverty under the more negative outlook, where there's a severe economic contraction followed by a sluggish recovery.

Mattoo said the 17 countries within the region key to global value chains and accounting for 70 percent of world trade "have all been affected" and now have a number of the world's highest numbers of COVID-19 cases.

"In this interdependent world where our economic destinies are intertwined, there's getting to be mutual amplification, because the shock is simultaneously affecting of these important countries," he told reporters.

"That makes it particularly costly in economic terms."

The World Bank involved strong action, with the priority first on containment but also on measures to cushion the shock to households of lost wages.

Mattoo said it's not too late to follow Korea's example to build up testing and containment in order that economies can begin to return to normal more quickly.

"This isn't rocket science. With help even poorer countries can roll in the hay ."

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