Developing Asia’s economic growth to contract in 2020
Travel Biz News Desk —
Manila – Economies across developing Asia will contract this year for the first time in nearly six decades but recovery will resume next year, as the region starts to emerge from the economic devastation caused by the coronavirus disease (COVID-19) pandemic, according to a report released by the Asian Development Bank (ADB) today.
The Asian Development Outlook (ADO) 2020 Update forecasts -0.7% gross domestic product (GDP) growth for developing Asia this year-marking its first negative economic growth since the early 1960s.
Growth will rally to 6.8% in 2021, in part because growth will be measured relative to a weak 2020.
“Most economies in the Asia and Pacific region can expect a difficult growth path for the rest of 2020,” said ADB Chief Economist Yasuyuki Sawada.
A prolonged COVID-19 pandemic remains the biggest downside risk to the region’s growth outlook this year and next year. To mitigate the risk, governments in the region have delivered wide-ranging policy responses, including policy support packages-mainly income support amounting to $3.6 trillion, equivalent to about 15% of regional GDP.
Other downside risks arise from geopolitical tensions, including an escalation of the trade and technology conflict between the United States and the People’s Republic of China (PRC), as well as financial vulnerabilities that could be exacerbated by a prolonged pandemic.
The PRC is one of the few economies in the region bucking the downturn. It is expected to grow by 1.8% this year and 7.7% in 2021, with successful public health measures providing a platform for growth.
In India, where lockdowns have stalled consumer and business spending, GDP contracted by a record 23.9% in the first quarter of its fiscal year (FY) and is forecast to shrink 9% in FY2020 before recovering by 8% in FY2021.
Subregions of developing Asia are expected to post negative growth this year, except East Asia which is forecast to expand by 1.3% and recover strongly to 7.0% in 2021.
Some economies heavily reliant on trade and tourism, particularly in the Pacific and South Asia, face double-digit contractions this year.
Forecasts suggest that most of developing Asia will recover next year, except for some economies in the Pacific including the Cook Islands, the Federated States of Micronesia, the Marshall Islands, Palau, Samoa, and Tonga.
The inflation forecast for developing Asia is revised downwards to 2.9 per cent this year from 3.2 per cent forecast in April, due to continued low oil prices and weak demand. Inflation for 2021 is expected to ease further to 2.3 per cent.
ADB , established in 1966, is owned by 68 members-49 from the region.
Sept.15 , 2020
