Asian economies to contract in 2020 for first time since 60s: ADB

Andrew Cummings
September 15, 2020

"The economic threat posed by the Covid-19 pandemic remains potent, as extended first waves or recurring outbreaks could prompt further containment measures", Mr Sawada said.

The Asian Development Bank (ADB) has maintained its 2020 growth outlook for South Korea, while revising down its forecast for the region amid the prolonged COVID-19 pandemic.

The bank's Asian Development Outlook Update shows about three-quarters of the region's economies are forecast to slump this year.

India's GDP growth for fiscal year (FY) 2020-2021 is forecast to contract by 9.0 percent as the COVID-19 pandemic weighs heavily on economic activity and consumer sentiment in the country, according to a new report by the Asian Development Bank (ADB) released on Tuesday.

In contrast, India, which is one of the hardest-hit countries in the world with more than 4.8 million cases despite lengthy lockdowns, is expected to see its economy shrink by nine percent in 2020 before expanding by eight percent next year. Growth will rally to 6.8% in 2021, in part because growth will be measured relative to a weak 2020.

The ADB is predicting strong growth for the region next year.

Consistent and coordinated steps to address the pandemic with policy priorities focusing on protecting lives and livelihoods of people who are already most vulnerable and ensuring the safe return to work and restart of business activities will continue to be crucial to ensure the region's eventual recovery is inclusive and sustainable, said Sawada.

The bank stated that China, where the infection was first found in the main city of Wuhan, was among the couple of economies in the area bucking the slump.

Policy support packages announced to the end of August had reached a total of $3.6 trillion - about 15 percent of regional GDP, the bank said.

While the pandemic remains the biggest downside risk to the region's outlook, Sawada said in a separate media briefing "worsening geopolitical tensions" that include the trade and tech war between US and Beijing, could also dent growth. It is predicted to develop by 1.8 per cent this 12 months and seven.7 per cent in 2021 with profitable public well being measures offering a platform for development.

ADB Country Director Manmohan Parkash said that recent economic performance in exports and remittances, and government's macroeconomic management including securing foreign funds for economic stimulus and social protection measures have made this recovery feasible. Forecasts recommend that nearly all of creating Asia will recuperate subsequent 12 months, aside from some economies within the Pacific.

The inflation forecast for developing Asia is revised downwards to 2.9% this year from 3.2% forecast in April, due to continued low oil prices and weak demand.

Bangladesh will grow 5.2 percent, Bhutan 2.3 percent and Nepal 2.3 percent.

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