By Ronnie Harui
Developing Asia's economy this year is likely to contract at a slower pace than previously forecast, mainly due to the easing of Covid-19 lockdowns and restrictions and a rebound in merchandise exports, the Asian Development Bank said Thursday.
Gross domestic product for developing Asia is expected to shrink 0.4% in 2020, compared with the ADB's earlier prediction of a 0.7% contraction. Most of developing Asia's sub-regions are projected to shrink this year, although East Asia is an exception with an upgraded growth forecast of 1.6% for 2020 owing to faster-than-expected recovery in China and Taiwan, ADB said.
"The outlook for developing Asia is showing improvement," said ADB Chief Economist Yasuyuki Sawada. "Growth projections have been upgraded for the People's Republic of China and India, the region's two largest economies. A prolonged pandemic remains the primary risk, but recent developments on the vaccine front are tempering this."
China's GDP is projected to grow 2.1% in 2020, up from the prior forecast of a 1.8% expansion. This revision factors in consistent fiscal and monetary support, although another round of monetary easing seems unlikely, the ADB said. Taiwan's GDP is expected to expand 1.7% this year, compared with the previous projection of a 0.8% growth.
South Asia's GDP is forecast to contract 6.1% in 2020, up from the 6.8% contraction projected by the ADB in September. India's forecast GDP growth for fiscal year 2020 is raised to an 8.0% contraction from a 9.0% contraction estimated previously.
Economic growth in Southeast Asia is still under pressure as Covid-19 outbreaks and containment measures persist, particularly in Indonesia, Malaysia, and the Philippines. The sub-region's GDP forecast for 2020 is revised down to a 4.4% contraction from a 3.8% decline previously.
The 2020 inflation forecast for developing Asia is revised down to 2.8% from 2.9% previously, owing to continued depressed demand and low oil prices, the ADB said.
For 2021, developing Asia's GDP is likely to grow 6.8% as the region moves toward recovery from the effects of the pandemic, the ADB said.
Write to Ronnie Harui at firstname.lastname@example.org
(END) Dow Jones Newswires