The World Bank warned that the pandemic fallout and China's economic recovery could lead the global market to a standstill. It revealed that the pandemic is causing an unprecedented global shock that could stagnate economic growth and significantly increase poverty rates worldwide.
The pandemic caused a global economic fallout that may halt China's growth in the next months driving 11 million people in East Asia into poverty. The World Bank warned that even in the best-case scenario, China would experience a sharp drop in its growth. Economic indicators such as China's expansion has already shown a slowing rate of 2.3 percent from 6.1 percent in 2019.
The report claimed that two-fifths of the world's population is under lockdown within their respective regions that could cause significant business slowdowns in transportation. The report explained that the result of the lockdowns may escape a recession, but would still suffer a sharp economic slowdown.
In January, World Bank economists forecasted that China would experience an economic growth by 5.0 percent in 2020, its worst performance since 1990. At present, the country showed a record contraction within its manufacturing sector in February. Its industrial production fell for the first time in 30 years that triggered a dire outlook from economists.
It was revealed that East Asia and Pacific countries would expect a 1.3 percent growth slowdown in the baseline. The effect is a 2.8 percent contraction in the more pessimistic scenario compared to economists' forecasts of 5.98 percent in 2019.
The World Bank report also revealed that the pandemic profoundly affected these region's economies that there exists uncertainty about the duration of its adverse efforts and when the shock would subside. It was also highlighted that trade tensions between the US and China could contribute to the adverse effects of the pandemic on these economies.
The report also manifested that containment and the imposition of lockdowns and social distancing mandates would allow the economies to recover. However, these impositions were expected to cause greater risks of durable financial stress even beyond 2020. The World Bank claimed that countries that rely heavily on commodities, trade, and tourism would be the most vulnerable for an economic shock. These countries were perceived to be heavy in debt. The economists claimed that they may only recover when there are healthy financial flows within its economy.
The report also revealed that there would be a sharp slowdown followed by a strong recovery in the future. It perceived that 24 million fewer people may escape poverty in vulnerable areas. However, 11 million people could experience poverty when a severe economic contraction followed by a sluggish recovery would result from the pandemic.
