Developing Asia Set To Log First Contraction In Nearly 6 Decades: ADB
September 15 2020 - 1:14AM
RTTF2
Developing Asia is set to register its first contraction since
early 1960s as the coronavirus pandemic continues to disrupt global
economic activity, the Asian Development Bank said Tuesday.
In its latest Asian Development Outlook Update, the lender said
developing Asia's gross domestic product will fall 0.7 percent in
2020, in contrast to a 0.1 percent rise estimated in June.
Nonetheless, the growth outlook for 2021 was upgraded to 6.8
percent from 6.2 percent. Despite the revision, GDP would be
substantially below expectations before Covid-19.
Consequently, the regional recovery will be L-shaped or
"swoosh-shaped" rather than V-shaped, the lender observed.
The lender cited threat of a prolonged Covid-19 pandemic and a
return to more stringent containment measures as the main risk to
the outlook.
The ADB cautioned that a return to more stringent containment
measures could slow or even derail recovery and possibly trigger
financial turmoil. Although economies in developing Asia remain
resilient, the agency noted that continued policy support is needed
to underpin recovery.
Excluding high-income newly industrialized economies, regional
GDP is expected to contract by 0.5 percent this year before growing
by 7.2 percent next year.
The two largest economies in the region are diverging as nascent
recovery in the People's Republic of China contrasts with continued
fragility in India.
China's GDP is forecast to grow 1.8 percent in 2020, unchanged
from the previous projection, while the outlook for next year is
revised up to 7.7 percent from 7.4 percent.
Meanwhile, the lockdown has stalled India's economy, and the
continuing outbreak looks likely to prevent economic activity from
resuming fully in the remaining three quarters of FY 2020, the
agency said. India's GDP is forecast to contract sharply by 9
percent this year before rising 8 percent in 2021.
According to ADB, East Asia is slowing more this year but will
rebound higher next year. The sub-regional forecast is for growth
in both years, at 1.3 percent in 2020 and 7.0 percent in 2021.
South Asia sees economic woes deepen as Covid-19 spreads. The
sub-region is now expected to shrink by a steep 6.8 percent this
year and rebound by 7.1 percent in 2021.
Southeast Asia retrenches, waging tough battles with the virus.
Strict quarantines and travel restrictions inflicted brutal
second-quarter, the lender noted. Projected sub-regional GDP is
revised down by nearly 5 percentage points to 3.8 percent
contraction in 2020, with the forecast rebound revised up by nearly
1 point to 5.5 percent growth in 2021.
Central Asian economic prospects continue to dim. Accordingly,
sub-regional GDP forecasts are downgraded from low growth to 2.1
percent contraction in 2020 and tepid 3.9 percent growth in
2021.
The outlook for Pacific is revised down substantially, to 6.1
percent contraction this year and only minimal growth in 2021.
The inflation forecast for the whole region was revised down to
2.9 percent from 3.2 percent as the slowdown in demand is expected
to outweigh inflationary supply-side disruptions. The forecast for
2021 was maintained at 2.3 percent.
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