The Asian Development Bank on Thursday said countries in Developing Asia will “barely grow” in 2020, while India’s economy is forecast to contract by 4 per cent this fiscal due to the adverse effect of the coronavirus pandemic.
Developing Asia will barely grow in 2020, as containment measures to address the coronavirus disease (COVID-19) pandemic is expected to hamper economic activity and weaken external demand, ADB said in a supplement to its Asian Development Outlook (ADO).
‘Developing Asia’ refers to a group of over 40 countries that are members of the ADB.
Excluding the newly industrialised economies of Hong Kong, China; the Republic of Korea; Singapore; and Taipei, China, Developing Asia is forecast to grow 0.4 per cent this year and 6.6 per cent in 2021, it said.
Hit hard by COVID-19, South Asia is forecast to contract by 3 per cent in 2020, compared to 4.1 per cent growth predicted in April. Growth prospects for 2021 are revised down to 4.9 per cent from 6 per cent, it said.
“India’s economy is forecast to contract by 4 per cent in fiscal year (FY) 2020, ending on 31 March 2021, before growing 5 per cent in FY2021 (to be ending March 2022),” according to the ADO supplement.
In the ADO published on April 3, ADB had had projected that India’s economic growth rate will slip to 4 per cent in the current fiscal on account of the global health emergency created by the COVID-19 pandemic.
“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,” said ADB Chief Economist Yasuyuki Sawada.
Sawada further said, “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. Governments should undertake policy measures to reduce the negative impact of COVID-19 and ensure that no further waves of outbreaks occur.”
As per ADB forecast, risks to the outlook remain on the downside.
The COVID-19 pandemic may see multiple waves of outbreaks in the coming period and sovereign debt and financial crises can not be ruled out.
“There is also the risk of renewed escalation in trade tensions between the United States and the People’s Republic of China (PRC),” it added.
For countries in Developing Asia, ADB forecasts growth of 0.1 for the region in 2020. This is down from the 2.2 per cent forecast in April and would be the slowest growth for the region since 1961, it said.
Growth in 2021 is expected to rise to 6.2 per cent, as forecast in April. Gross domestic product (GDP) levels in 2021 will remain below what had been envisioned and below pre-crisis trends.