Developing Asia growth to decline sharply in 2020: ADB

The report forecasts regional growth of 2.2 per cent in 2020, a downward revision of 3.3 percentage points relative to the 5.5 per cent ADB had forecast in September 2019. Growth is expected to rebound to 6.2 per cent in 2021, assuming that the outbreak ends and activity normalises. Excluding the newly industrialised economies of Hong Kong, China; the Republic of Korea; Singapore; and Taiwan, developing Asia is forecast to grow 2.4 per cent this year, compared to 5.7 per cent in 2019, before rebounding to 6.7 per cent next year.

“The evolution of the global pandemic—and thus the outlook for the global and regional economy—is highly uncertain. Growth could turn out lower, and the recovery slower, than we are currently forecasting. For this reason, strong and coordinated efforts are needed to contain the COVID-19 pandemic and minimise its economic impact, especially on the most vulnerable,” said ADB chief economist Yasuyuki Sawada.

In China, a sharp contraction in industry, services, retail sales, and investment in the first quarter due to the COVID-19 outbreak will pull growth down to 2.3 per cent this year. Growth will rebound to an above normal 7.3 per cent in 2021 before reverting back to normal growth. In India, measures to contain the spread of the virus and a weaker global environment this year will offset the benefits from recent tax cuts and financial sector reforms. Growth in India is forecast to slow to 4.0 per cent in fiscal year (FY) 2020 before strengthening to 6.2 per cent in FY2021.

Underpinning much of the weakness across Asia is a deteriorating external environment, with growth stagnating or contracting in the major industrial economies of the US, euro area, and Japan.

The ADB estimate does not take into account such factors as supply disruptions, interrupted remittances, urgent health care costs, and potential financial disruptions, as well as the long-term effects on education and the economy.

Fibre2Fashion News Desk (RKS)