The economic fallout of COVID-19 has severely dampened growth in EAP, significantly hindering poverty reduction efforts. The slowdown in the region is led by sharp decline of economic activity in China. China’s GDP shrank 6.8% yoy in Q1 2020, the first quarterly contraction 1976. According to the World Bank, China’s GDP is expected to slow to 2.3% in 2020 from 6.1% in 2019. Global containment measures have significantly reduced economic activity, amplifying the impacts on EAP economies through a collapse in tourism, plunging trade and disruptions to global supply chains. Developing EAP growth, excluding China, is projected to slow to 1.3% in 2020 from 4.7% in 2019.
Many economies in EAP (Cambodia, Thailand, Philippines, and some Pacific countries) are highly dependent on tourism as a major source of income, export earnings and job creation, leaving them highly susceptible to the slump in tourism. The region is also highly open to trade and investment and is linked to global value chains. Economies dependent on manufacturing (Cambodia, Malaysia, Thailand and Vietnam), are vulnerable to supply chain disruptions as they often rely on imported goods for their exports. Those specializing in commodities are affected by reduced global demand.