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 Bank, in its latest Outlook Update, said developing Asia's gross domestic product will fall 0.7 percent in 2020, in contrast to a 0.1 percent rise estimated in June. Nonetheless, the growth outlook for 2021 was upgraded to 6.8 percent from 6.2 percent. Despite the revision, GDP would be substantially below expectations before Covid-19. Consequently, the regional recovery will be L-shaped or "swoosh-shaped" rather than V-shaped, the lender observed.
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, the lender said. The lender cited threat of a prolonged Covid-19 pandemic and a return to more stringent containment measures as the main risk to the outlook. The ADB cautioned that a return to more stringent containment measures could slow or even derail recovery and possibly trigger financial turmoil. Although economies in developing Asia remain resilient, the agency noted that continued policy support is needed to underpin recovery. Excluding high-income newly industrialized economies, regional GDP is expected to contract by 0.5 percent this year before growing by 7.2 percent next year.
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