The International Monetary Fund (IMF) on Tuesday cut its 2021 economic growth forecast for Asia to 6.5 per cent, citing “new peaks of the pandemic cycle.” Many countries in the region have reported record coronavirus-related deaths and case numbers in the months since the IMF’s April forecast of around 7.5-per-cent growth for this year. “The pandemic’s resurgence has triggered lockdowns that are hampering the recovery,” the IMF said, in its latest Asia-focused economic outlook. Despite the impact of the virus and the harsh restrictions applied in countries such as Australia and Malaysia, Asia is nonetheless is likely to remain the world’s fastest-growing region, the IMF said, while warning that the pandemic is widening a “divide” between the region’s advanced economies and their “emerging” or “developing” counterparts.
While the coronavirus pandemic upended state spending plans and left economies reeling, its impact is likely to pale in comparison to challenges such as ageing populations, according to the Organisation for Economic Co-operation and Development (OECD). The Paris-based group’s secretariat said on Tuesday that before the pandemic, governments were facing health spending rises of over two percentage points of gross domestic product (GDP) between now and 2060 and around the same for pensions in countries with what the OECD labelled “unfavourable demographics.” By comparison, recently accrued government debt to pay for pandemic-related social and health spending is likely to add “only about 1/2 percentage point of GDP to long-run fiscal pressure in the median country,” according to the OECD.
The International Monetary Fund (IMF) on Tuesday cut its global economic growth forecast for 2021 to 5.9 per cent, citing “uncertainty about how quickly the [coronavirus] pandemic can be overcome.” In its latest World Economic Outlook, the IMF pared 0.1 percentage points off its July projection, in part due to “advanced economies” being hit by supply-chain disruptions that were exacerbated by recent pandemic outbreaks and lockdowns in Asia’s manufacturing hubs. Gita Gopinath, the IMF’s director of research, said “global recovery continues but momentum has weakened.” The Fund said it expects the world’s biggest economy, the US, to grow by 6 per cent this year, one percentage point down on what it projected in July, with China, the second-biggest, in line for 8-per-cent expansion.
Much of East Asia and the Pacific faces far slower economic growth than was expected a few months ago, according to the World Bank, which on Tuesday slashed its outlook for most of the region’s 18 countries. Measured without China, the rest of the East Asia and Pacific’s “developing” economies are set to expand by 2.5 per cent this year, the bank warned, cutting a forecast of 4.4 per cent made in April before regional coronavirus case numbers and deaths soared. The less rosy outlook is due to pandemic restrictions “constraining economic activity,” according to the bank. It said the Delta variant and attempts to slow its spread were “disrupting production” and hindering prospects of a recovery.
The coronavirus pandemic has worsened a “grim” economic outlook for the world’s poorest countries, UN trade officials believe, with many likely to be “mired” in crises for years to come. An “emerging two-speed global recovery” from the pandemic and related restrictions, which last year caused most countries’ economies to shrink, could “reverse many hard-won development gains,” the United Nations Conference on Trade and Development (Unctad) warned on Monday.
Research and development (R&D) spending in booming sectors such as software and pharmaceuticals has increased since the start of the coronavirus pandemic, while transport and travel, which have been hit hard by the pandemic, have reported falling outlays. Overall spending was up, according to the World Intellectual Property Organization (WIPO), which said that “scientific output, expenditures in research and development, intellectual property filings and venture capital deals continued to grow” last year after a record-setting 2019. WIPO had earlier reported an “all-time high” number of patent filings for 2020, describing the record on Monday as “driven by medical technology, pharmaceuticals and biotechnology.”
Governments need to “rethink global travel restrictions,” according to the Singapore-based secretariat of the 21-country Asia-Pacific Economic Cooperation (APEC) bloc, which described the pandemic-related curbs as “chaotic.” The frontier rules “are not consistent,” the secretariat said on Wednesday, leading to “even essential travel” becoming “more cumbersome” and “more exclusive” than it has been for decades.
Unemployment across the Organisation for Economic Co-operation and Development (OECD) fell for the third consecutive month in July, the group’s Paris-based secretariat said on Thursday. As countries continued to mostly ease coronavirus pandemic restrictions, joblessness dropped by 0.2 per cent to 6.2 per cent of the OECD-area workforce. However, unemployment remained almost 1 per cent above the 5.27 per cent recorded in February last year, the month before the World Health Organizaton declared a pandemic and most countries imposed lockdowns that froze swathes of their economies. Overall, around 1.6 million people were taken off unemployment registers across the OECD in July, leaving over 41 million people without a job.
International and domestic travel demand showed “significant momentum” in July compared to the previous month but remained overall 53 per cent below what was recorded in the same month in 2019, according to the International Air Transport Association (IATA). “Extensive government-imposed travel restrictions continue to delay recovery in international markets,” said the IATA, which represents almost 300 airlines carrying around 8 in 10 of the world’s passengers. There were huge differences between some regions and between domestic travel, which by July had recovered to within around 15 per cent of pre-pandemic numbers, and international, where the difference was a whopping 73.6 per cent, the IATA said. In June, domestic travel was 22 per cent less than the same month two years ago, while international travel was down 80 per cent. The hardest hit region remains the Asia-Pacific, which in July saw a near 95-per-cent-fall in international traffic compared to 2019, only slightly better than during the worst of the pandemic.
DUBLIN — Ford’s Cologne factory is to pause production of Fiesta models due to a shortage of semiconductors usually sourced from Malaysian factories, which have been hit hard by the coronavirus pandemic and related government restrictions. The shutdown is to begin on Thursday and last at least two weeks, the company said on Wednesday, and comes as factories around the world are being hit with shortages of computer chips and other components due to manufacturing supply chains snapping due to pandemic curbs. Toyota and Volkswagen are among the other car brands to recently warn of slowing production due to tightening supplies of chips. According to Capital Economics, with “virus disruption” likely to last “at least the next couple of months,” the global shortage of chips is “unlikely to get better any time soon.”