Published: 16:48, June 18, 2020 | Updated: 00:12, June 6, 2023
ADB slashes growth forecast for developing Asia to 0.1% in 2020
By Xinhua

Pedestrians walk past a logo of the Asian Development Bank (ADB) displayed outside its headquarters in Manila, Philippines on Sept 2, 2010. (TED ALJIBE / AFP)

MANILA - Developing Asia will barely grow in 2020 as containment measures to address the COVID-19 pandemic hamper economic activity and weaken external demand, according to an Asian Development Bank (ADB) report released on Thursday.

This is down from the 2.2 percent forecast in April and would be the slowest growth for the region since 1961 

from an updated Asian Development Bank report

In a regular supplement to its annual flagship economic publication, the Asian Development Outlook (ADO) 2020 released in April, ADB forecasts growth of 0.1 percent for the region in 2020.

"This is down from the 2.2 percent forecast in April and would be the slowest growth for the region since 1961," adds the updated report.

The report further says growth in 2021 is expected to rise to 6.2 percent, as forecast in April. Gross domestic product (GDP) levels in 2021 will remain below what had been envisioned and below pre-crisis trends, adds the report.

Excluding the newly industrialized economies of China's Hong Kong Special Administrative Region, South Korea, Singapore, and China's Taiwan, the report says developing Asia is forecast to grow 0.4 percent this year and 6.6 percent in 2021.

"Economies in Asia and the Pacific will continue to feel the blow of the COVID-19 pandemic this year even as lockdowns are slowly eased and select economic activities restart in a 'new normal' scenario," ADB Chief Economist Yasuyuki Sawada said in a statement.

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"While we see a higher growth outlook for the region in 2021, this is mainly due to weak numbers this year, and this will not be a V-shaped recovery," he said, stressing the need for governments to "undertake policy measures to reduce the negative impact of COVID-19 and ensure that no further waves of outbreaks occur."

The updated report says that "risks to the outlook remain on the downside."

East Asia is forecast to grow 1.3 percent in 2020 while growth in 2021 will recover to 6.8 percent, according to the report.

Hit hard by COVID-19, South Asia is forecast to contract by 3.0 percent in 2020, compared to 4.1 percent growth predicted in April. Growth prospects for 2021 are revised down to 4.9 percent from 6.0 percent.

India's economy is forecast to contract by 4.0 percent in fiscal year (FY) 2020, ending on 31 March 2021, before growing 5.0 percent in FY 2021.

According to the report, economic activity in Southeast Asia is expected to contract by 2.7 percent this year before growing by 5.2 percent in 2021.

Contractions are forecast in key economies as containment measures affect domestic consumption and investment, including Indonesia (-1.0 percent), the Philippines (-3.8 percent), and Thailand (-6.5 percent).

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Vietnam is forecast to grow by 4.1 percent in 2020. "While that is 0.7 percentage points lower than ADB's April estimates, it is the fastest growth expected in Southeast Asia," the report says.

Inflation for developing Asia is forecast at 2.9 percent in 2020, down from a forecast of 3.2 percent in April, reflecting depressed demand and lower oil prices. In 2021, it says inflation is expected to ease to 2.4 percent.