IMF slashes 2020 Asia growth forecast; China still expanding despite epidemic centre

Oct. 21, 2020 11:42 AM ETGXC, TDF, PIN, MCHI, INDA, FLINBy: Khyathi Dalal, SA News Editor
  • For 2020, International Monetary Fund (IMF) cuts Asia's economic forecast indicating a sharper-than-expected contraction in countries like India amid the pandemic taking a toll on the region.
  • Asia's economy is seen contracting 2.2%, decline is 0.6 of a percentage point larger than its forecast in June led by major slumps in India, the Philippines and Malaysia.
  • In April 2020, IMF had expected a zero percent growth in 2020:

  • "Fear of infection and social distancing measures are dimming consumer confidence and will keep economic activity below capacity until a vaccine is developed," IMF report on APAC region revealed.
  • India's economy is seen narrowing by 10.3% as against a 1.9% expansion in the Chinese economy.
  • However, for 2021 the IMF upgraded growth forecast to 6.9% led by expected stronger recoveries in China, the United States and the euro area.
  • IMF said there were "considerable" risks such as the chance of a second wave of infections, escalating U.S. tensions and a potential return to tighter financial conditions.
  • "A full arsenal of policy support is needed” that includes steps to help households and businesses cope with structural changes caused by COVID-19 such as permanent job losses in industries like tourism," the report said.
  • As per the October 2020 report, the below are the latest world economic outlook growth projections:

  • Quick look at earlier two predictions of the IMF forecast for 2020 Global growth:

  • Quick look at various Asian ETFs performance over the past 6-months: iShares MSCI China ETF (NASDAQ:MCHI), Invesco India ETF (NYSEARCA:PIN), Franklin FTSE India ETF (NYSEARCA:FLIN), iShares MSCI India Index ETF (BATS:INDA), Templeton Dragon Fund (NYSE:TDF) and SPDR S&P China ETF (NYSEARCA:GXC).

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