Under a worst-case scenario, the region could suffer its sharpest downturn since a devastating currency crisis more than two decades ago, the bank said in a forecast released on Monday.
This would see the East Asian-Pacific economy contract by 0.5 per cent in 2020 and poverty – defined as an income of £4.45 a day – increase by 11 million people.
Such an estimate marks a stark contrast to the World Bank’s initial forecast that economic growth would be sufficient to lift 35 million people out of poverty this year, including 25 million in China alone.
The ‘baseline’ forecast predicts growth in the region would slow to 2.1 per cent for the rest of the year, down from 5.8 per cent in 2019, with a degree of economic recovery set to take hold in the summer.
Asia faces an unusual combination of “disruptive and mutually reinforcing events,” the report said. “Significant economic pain seems unavoidable in all countries.”
Countries in the region should invest in cross-border, public-private medical partnerships and take targeted fiscal measures, such as providing subsidies for sick pay and healthcare, to mitigate some of the immediate impacts of the pandemic, the World Bank said.
Governments should also ease credit to help households smooth their consumption and help firms survive the initial shock of the outbreak.
“The good news is that the region has strengths it can tap, but countries will have to act fast and at a scale not previously imagined,” said Victoria Kwakwa, vice president for East Asia and the Pacific at the World Bank.
A slowdown of the size being projected by the organisation for such a critical part of the global economy would have severe effects for the rest of the world.
The World Bank said it had not finished forecasts for other regions, but the International Monetary Fund (IMF) warned it is clear the global economy had already entered a recession that could be as bad or worse than the slump following the 2008 financial crisis.
“In addition to bold national actions, deeper international cooperation is the most effective vaccine against this virulent threat,” said Aaditya Mattoo, chief economist for East Asia and the Pacific at the World Bank.
The World Bank has pledged to provide £10.73 billion in financial support through a fast-track package to strengthen the response of developing countries to the virus, and expects to deploy up £122.64 billion over the next 15 months to protect the poor and vulnerable.
If needed, the IMF has said it will commit its full £800 billion in lending resources to support nations hit by the virus.
Additional reporting by agencies