Unfortunately, the regional economy will contract this year as the virus continues to spread and as ill effects linger from border restrictions, quarantines, and stay-at-home orders. Deterioration is far more widespread than during the Asian financial crisis of 1997–1998, reaching every corner of Asia and the Pacific. Conditions are also grim for our major trade partners, with GDP in the euro area and the US likewise stumbling and

making it hard for our region to recover. The sustained spread of COVID-19 remains the major risk to economies around the world. A prolonged pandemic and global slowdown will severely harm not just those economies struggling with significant outbreaks at home, but also those that depend on tourism, commodity exports, or other forms of external demand. Softer demand and falling food and fuel prices will ease the inflation burden on most Asian consumers, but supply disruption stemming from mobility and transport restrictions may pose particular inflation risk in some economies. This merits close monitoring.