(Karachi) In wake of next year's economic growth forecast, the International Monetary Fund (IMF) has warned that Asia Pacific region will witness a sluggish economic recovery, reflecting higher contraction even as China takes the lead than rest of the world.

As per IMF's Regional Economic Outlook Report, the analysis has been made in view of the fact that many countries in the region are struggling to come out of the economic impact after the coronavirus pandemic.

The global financial body stated: "Asia's economy is expected to contract 2.2 percent this year. That decline is 0.6 of a percentage point larger than its forecast in June, due to sharp slumps in countries like India, the Philippines and Malaysia."

The report stated that countries dependent on tourism will particularly be hard hit. “Returning to full capacity will be a long slog,” the IMF said.

It mentioned consumer confidence has been shattered due to COVID-19 outbreak and social distancing measures that affected the economic activity and it will remain the same till a vaccine is developed.

“In some cases where inflation remains low, debt monetization could be appropriate, provided it is well communicated, limited in size, time-bound, and implemented within a clear operational framework that preserves central bank independence and does not impede monetary policy,” the fund said.

"Although China's recovery can boost regional trade, weak global growth, closed borders, and festering tensions around trade, technology, and security have worsened the prospects for a trade-led recovery in the region."

The IMF pointed out that India's economy is likely to shrink 10.3 percent this year in stark contrast to China, which is set to expand 1.9 percent.

"The recovery is projected to be more gradual than previously forecast. In 2021 global growth is projected at 5.2 percent, 0.3 percentage point lower than projected in June 2020, reflecting the persistence of social distancing into 2021," the report highlighted.