The Asian Development Bank (ADB) sees growth across Asia-Pacific falling to a 59-year low largely because of the COVID-19 pandemic, with Brunei Darussalam’s gross domestic product (GDP) forecast at 1.4 per cent this year compared to two per cent as previously projected.
However, the ADB’s Asian Development Outlook (ADO) Supplement report released on Thursday showed the sultanate’s economic growth projected to bounce back to three per cent next year.
Developing Asia, a group of 45 countries in the Asia-Pacific region, is expected to post growth of just 0.1 per cent in 2020. The ADB said Asia was suffering the slowest pace since 1961, before growing by 6.2 per cent next year. The updated forecasts show more damage to economies in Developing Asia than estimates it released it April, which predicted a 2.2 per cent growth for the region in 2020.
Developing Asia will barely grow in 2020 as containment measures to address the COVID-19 pandemic, hamper economic activity and weaken external demand.
In a regular supplement to its annual flagship economic publication, ADB Chief Economist Yasuyuki Sawada said, “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.
“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.”
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 cannot 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).
East Asia is forecast to grow 1.3 per cent in 2020 — the only sub region to experience growth this year — while growth in 2021 will recover to 6.8 per cent. Growth in the PRC is forecast at 1.8 per cent this year and 7.4 per cent in 2021 compared to the April estimates of 2.3 per cent and 7.3 per cent.
Hit hard by COVID-19, South Asia is forecast to contract by three per cent in 2020, compared to the 4.1 per cent growth predicted in April. Growth prospects for 2021 are revised to 4.9 per cent from six per cent. India’s economy is forecast to contract by four per cent in fiscal year (FY) 2020, ending on March 31, 2021 before growing five per cent in FY2021.
Economic activity in Southeast Asia is expected to contract by 2.7 per cent this year before growing by 5.2 per cent in 2021. Contractions are forecast in key economies as containment measures affect domestic consumption and investment, including Indonesia (-1 per cent), the Philippines (-3.8 per cent) and Thailand (-6.5 per cent). Vietnam is forecast to grow 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.
Central Asia’s economic activity is expected to contract by 0.5 per cent compared to the 2.8 per cent growth forecast in April due to trade disruptions and low oil prices. Growth is forecast to recover to 4.2 per cent in 2021.
Restricted trade flows and declining tourism numbers have dampened economic outlook for the Pacific sub-region. The sub-regional economy is forecast to contract by 4.3 per cent in 2020 before rising to 1.6 per cent growth in 2021.
Inflation for developing Asia is forecast at 2.9 per cent in 2020, down from a forecast of 3.2 per cent in April, reflecting depressed demand and lower oil prices. In 2021, inflation is expected to ease to 2.4 per cent.