Daily Management Review

ADB Cuts Down Growth Forecast For Developing Asia For 2020


ADB Cuts Down Growth Forecast For Developing Asia For 2020
An updated Asian Development Bank (ADB) report released recently showed that there will be almost no growth in the developing economies of Asia for 2020 because of hit to the economies because of the lockdowns and stay at home orders to prevent the spread of the novel coronavirus pandemic. The report noted that the pandemic and related restrictions will hit economic activity and weaken external demand resulting in very little growth this year.
A growth of 0.1 per cent for the region in 2020 was forecast by the ADB in a regular supplement to its annual flagship economic publication, the Asian Development Outlook (ADO) 2020.
"This is down from the 2.2 percent forecast in April and would be the slowest growth for the region since 1961," the updated report stated.
The amended report however held on to the earlier growth projections of the ADB for the region for 2021 at 6.2 per cent. The report stated that he gross domestic product (GDP) levels in 2021 will stay well below what had been envisioned and below pre-crisis trends.
It is forecasts that developing Asia will grow at 0.4 per cent this year and 6.6 percent in 2021 excluding the newly industrialized economies of China's Hong Kong Special Administrative Region, South Korea, Singapore, and China's Taiwan.
"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.
"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."
"Risks to the outlook remain on the downside," says the updated report.
According to the report, the growth rate for this year for East Asia was pegged at 1.3 per cent and at 6.8 per cent for the next year. 
For South Asia, the report forecasts a contraction of 3.0 per cent for 2020 because of the hit of the noel coronavirus pandemic compared to an estimation of growth of 4.1 per cent as predicted by the bank in April  Growth prospects for 2021 are revised down to 4.9 percent from 6.0 percent.
The report predicted a contraction of 4.0 per cent for the Indian economy for its fiscal year of 2020-21 while a growth of 5.0 per cent is predicted for the next fiscal year.
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.
The report also predicts contractions for some of the hey economies of South East Asia because of containment measures including Indonesia at 1.0 per cent, the Philippines at 3.8 per cent and Thailand at 6.5 per cent.
However one of the bright spots in the report is that of Vietnam which is predicted to grow by 4.1 per cent 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.