Braving the Storms: East Asia and Pacific Economic Update, April 2022
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The region¡¯s economic recovery resumed in the fourth quarter of 2021. China¡¯s economy grew by 8.1 percent in 2021, while the rest of the region grew by 2.6 percent. But the recovery has been uneven across EAP countries, with output still below pre-pandemic levels in many of the region¡¯s economies. The worst affected and the slowest to recover are Myanmar and several Pacific Island countries.
The recovery is uneven across countries¡
(percentage GDP growth between 2019-2021)
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Four broad factors are shaping the recovery across EAP countries: the scale of the COVID-19 shock, the measures by which the disease is being contained, the ability to take advantage of buoyant external conditions, and the capacity of the government to provide support.
EAP country performace is shaped by COVID-19 containment, external conditions, and governments support
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Three clouds have gathered over the economic horizon: the war in Ukraine, financial tightening in the U.S., and structural slowdown in China. Set against these shocks, are some growth opportunities in the fields of trade, digital technology, and green production. The region is projected to grow by 5 percent, down from the 5.4 percent projected in October. Growth could slow to 4 percent if global conditions worsen, and national policy responses are weak.
Three international developments are shaping external conditions
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This section describes a set of reforms that can help countries to mitigate risks and grasp opportunities. For instance, the reform of trade-related policies in goods and, especially, in still-protected EAP services sectors is necessary for EAP countries to take advantage of shifts in the global trade landscape. Another example is the need for policies that encourage technology diffusion and adoption.
Vietnam accounted for much of the increase in EAP countries¡¯ share of US imports
Source: China, EU, Japan, US customs trade data. Note: figure shows share in US final goods imports
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Box 1. Vaccination, GDP growth, and household economic circumstances
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Box 2. Not all endemicity is benign
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Box 3. Tourism and growth in the Pacific
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Box 4. The effects of global supply chain disruptions
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Box 5. The Role of Price Controls in Times of High Volatility
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Box 6. Sanctions imposed on Russia in response to the escalation of war in Ukraine
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Box 7. Estimated financial spillovers from the United States and China
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Box 8. Estimated growth spillovers from China and United States to developing East Asian economies
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Box 9. The simulated regional impact of China¡¯s property market downturn and Zero-COVID policy
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Box 10. Impact of the Fuel and Grain Price Increase on Real Incomes
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Box 11. Possible effects on poverty: A simulation from the Philippines
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Box 12. Limited technology diffusion among East Asian firms: evidence from Vietnam
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Box 13. China¡¯s Growth in 2022: Between Shocks and Stimulus
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Box 14. COVID-19¨Crelated policy issues examined in recent economic updates
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Box 15. Indonesia¡¯s tax reforms to create fiscal space
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East Asia and Pacific Launch Event: Report Presentation
COVID-19¨CRELATED POLICY ISSUES EXAMINED IN RECENT ECONOMIC UPDATES
Previous updates have focused on a number of other policy issues, including:
(1) to contain COVID-19;
(2) for relief, recovery, and growth;
(3) to build back better;
(4) of COVID-19, especially through non-pharmaceutical interventions like testing-tracing-isolation;
(5) to prevent long-term losses of human capital, especially for the poor;
(6) to help households smooth consumption and workers reintegrate as countries recover;
(7) to prevent bankruptcies and unemployment, without unduly inhibiting the efficient reallocation of workers and resources;
(8) to support relief and recovery without undermining financial stability; and
(9) , especially of still-protected services sectors¡ªfinance, transport, communications¡ªto enhance firm productivity, avert pressures to protect other sectors, and equip people to take advantage of the digital opportunities whose emergence the pandemic is accelerating.
(10) creating and to promote equitable growth.
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