As the impact of the novel COVID-19 pandemic on global economic landscape continues to hamper productive activities across geo-political zones worldwide, Asia’s economy has been projected to contract with many of the countries plunging into deficit growth for the first time over six decades.
This is even as the level of output next year still projected to be below pre-pandemic projections even as growth recovers
According to a report by the Asian Development Bank (ADP) on the region’s economic performance potential sourced from www.business-standard-com, Asia’s gross domestic product is forecast to decline by 0.7 per cent in 2020, down from June’s projection of an increase of 0.1 per cent.
The bank’s chief economist, Yasuyuki Sawada, said in a live-streamed briefing on Tuesday that a contraction this year would be the first since 1962.
He said: “The economic threat posed by the Covid-19 pandemic remains potent, as extended first waves or recurring outbreaks could prompt further containment measures.
“Downturns across developing Asia are more widespread than previous crises, with three-quarters of economies in the region tipped to shrink this year, the banker added.
According to the ADB report, China, the largest economy in Asia, is predicted to expand 1.8 per cent this year, the same rate projected in June, as successful public health measures provide a springboard for growth
The ADB stated that China’s growth would accelerate to 7.7 per cent in 2021, up from a previous forecast of 7.4 per cent.
However, the bank reported that in India, where lockdowns had stalled private spending for months, the country’s GDP will shrink by 9 per cent this year, sharply down from June’s forecast of -4 per cent.
The report also predicted big downgrades for the Philippines and Thailand, which are now projected to contract 7.3 per cent and 8 per cent respectively.
Sawada, during an interview with Bloomberg TV correspondents, Haslinda Amin and Yvonne Man, clarified that the downgrades took into account that the pandemic has been “more serious” than initially anticipated, adding that “having said that, our baseline assumption is that health risks will be basically contained within this year.”
Noting that “large-scale” fiscal stimulus has helped cushion the blow and provides a base for a rebound, Sawada predicted a rebound in the developing Asian economy, a region that excludes advanced nations like Japan, Australia and New Zealand , to 6.8 per cent in 2021, in part because it will be measured against a weak 2020.
According to him, even then that will still leave next year’s level of GDP below pre-coronavirus projections, implying that the recovery is only “partial” and “not full.
”Virus containment “seems to be translated into growth performance,” and a prolonged pandemic remains the biggest downside risk this year and the next, he said.
Sawada also linked the US-China trade tensions and technology conflicts and financial vulnerabilities amid the pandemic as among the factors that would weigh on the region’s growth.
He said “policies focused on protecting lives and livelihoods, and ensuring a safe return to work and restart of businesses, were crucial to ensuring a sustained recovery for the region.”