The International Monetary Fund (IMF) on Wednesday revised down its 2020 forecast for the Asian economy to a contraction of 2.2 percent.
The IMF's latest Regional Economic Outlook shows that a recovery started in the third quarter, though growth engines are not all firing with the same strength across all countries, leading to a "multispeed recovery," Jonathan D. Ostry, acting director of the IMF's Asia and Pacific Department, said during a virtual news conference.
Advanced economies (Australia, South Korea, Japan and New Zealand), while still in recession, are expected to do somewhat better than expected in 2020, reflecting a faster pickup in activity following earlier exit from lockdowns, Ostry noted.
China, which suffered from the COVID-19 pandemic's blow earlier than other countries, has seen a strong recovery after the first quarter lockdown, with growth revised up to 1.9 percent this year, "a rare positive figure in a sea of negatives," the IMF official said.
The multilateral lender expects the region to grow by 6.9 percent in 2021. But even with this boost, output will be lower at the end of 2021 than the IMF's pre-pandemic projection, Ostry said, noting that the "scars will be deep."
"With declining labor force participation and weak confidence dimming private investment, potential output by the middle of the decade could be some 5 percent lower than before the pandemic," he said.