MANILA (AFP) – Coronavirus-ravaged economies across Asia Pacific will make a “swoosh-shaped” recovery next year, the Asian Development Bank (ADB) forecast yesterday, but it warned that further restrictions to combat the contagion could derail the region’s return to growth.
Developing Asia – stretching from the Cook Islands in the Pacific to Kazakhstan in Central Asia – is expected to contract in 2020 for the first time in nearly six decades, throwing tens of millions of people into poverty, the Philippines-based lender said.
The 0.7 per cent shrink in gross domestic product (GDP) compares with the bank’s previous estimate in June for 0.1 per cent growth and will mark “the first regional GDP contraction since the early 1960s”, it said.
“The downturn is across the board, with almost three-fourths of regional economies projected to contract – the largest such share in the past six decades,” the bank said in the latest update to its outlook.
While the vast region is expected to bounce back next year, with GDP projected to grow 6.8 per cent, it will be “substantially smaller” than forecast before Covid-19 struck.
“Thus, the regional recovery will be L-shaped or ‘swoosh-shaped’ rather than V-shaped,” the bank said, noting a prolonged pandemic was the main threat to the outlook.
The bank warned that re-imposing tough virus restrictions could hamper the recovery and even trigger “financial turmoil”.
“While economies in developing Asia remain resilient, continued policy support is needed to underpin recovery,” ADB Chief Economist Yasuyuki Sawada said.
Policy support packages announced to the end of August had reached a total of USD3.6 trillion – about 15 per cent of regional GDP, the bank said.
China, where the virus first emerged late last year before morphing into a pandemic that has infected more than 29 million people worldwide, was one of the few economies to buck the downward trend in the region.
After successfully beating back the disease, the world’s second largest economy is forecast to grow 1.8 per cent this year and 7.7 per cent in 2021, the bank said.
In contrast, India, which is one of the hardest hit countries with over 4.8 million infections despite lengthy lockdowns, is expected to shrivel by nine per cent in 2020 before expanding by eight per cent next year.