[ad_1]
By Timothy Rooks
The economies of Asian countries, from the Pacific to the Eurasian steppe, will contract this year for the first time in nearly six decades, according to a new report from the Asian Development Bank (ADB) released Sept. 15.
The Philippines-based bank expects gross domestic product (GDP) to decline for many countries in the region with an overall decline of 0.7% for the entire region by 2020.
Due to the unforeseen and unprecedented events of this year, the bank saw the need to publish this updated version of its “Asian Development Outlook 2020” report. Until June, they had predicted that the year would end with 0.1% growth. By comparison, ADB expects the United States to end the year 5.3% lower and the Eurozone 8%.
Not surprisingly, the main culprit for the downgrades is the coronavirus pandemic and the lockdown measures put in place to stop it. In addition to hurting businesses, the economic recession will unexpectedly send many people into poverty. Depending on the exact definition of poverty, it could mean between 78 and 162 million additional people in the region living in poverty, “reversing the poverty reduction achieved in the last 3-4 years,” according to the report.
However, the bank views 2020 as an anomaly. After so many years of growth, they expect the region to get back on track in 2021 with growth of 6.8%, although it is still below pre-pandemic forecasts and compares with weak figures for this year.
From Taipei to Timor-Leste
For its prediction, the bank looked at its 46 member countries, which it calls “developing Asia,” a list that includes nations such as China, Mongolia, South Korea and Singapore to Papua New Guinea, Fiji and even Armenia, Azerbaijan and Tajikistan.
The ADB also assumed that a coronavirus vaccine is absolutely critical and will not be available until next year at the earliest. “Things will not go back to the way they were before Covid unless a vaccine is developed and produced,” Yasuyuki Sawada, the bank’s chief economist, told DW in an interview. Until this happens, there is always the possibility of more travel locks and restrictions.
Overall, the report expects about three-quarters of these countries to post negative growth this year. China, on the other hand, is one of 12 countries that is predicted to end in black numbers, despite being at the epicenter of the Covid-19 outbreak. Here the bank expects the country to end the year with growth of 1.8%.
However, India is not expected to do so well. The country, which was hit by the disease later than many other nations, appears poised to report a 9% economic recession this year before recovering next year. The worst affected country will be the Maldives, which is forecast to contract by more than 20%, followed by Fiji with a 19.8% drop.
Of the bank’s 46 member countries, the report sees all but six in black numbers with positive growth by 2021.
Not out of the forest
It is not all bad news. The bank highlights low inflation due to low oil prices and “declining demand and moderate food prices.” They also point to helpful government support packages announced in late August that amounted to US $ 3.6 trillion, which is equivalent to about 15% of regional GDP and is “divided fairly evenly between direct income support. and measures to shore up liquidity and credit. ” The bank believes that this government support for businesses and individuals is crucial for the region’s recovery.
But Asia is not out of the woods. Despite having regained much ground in trade, ongoing disputes between the United States and China could put further pressure on China and have knock-on effects in the region. The bank’s Yasuyuki Sawada also sees political tension and “friction over trade and technology” as one of the biggest obstacles to economic recovery.
Additionally, another big Covid-19 outbreak or two could force the bank to take another revised look at the economies of the region. The Asian Development Bank itself warned that further outbreaks and lockdowns could have a disastrous impact and halt a regional recovery.
Right now, controlling and containing the pandemic is the number one priority for all countries. “A protracted pandemic is the main downside risk to the outlook. Persistent or renewed outbreaks and a return to tight containment could derail the recovery and trigger a financial crisis,” the report concluded. “Recovery depends on measures to address the health crisis and continued policy support.”
READ NEXT: How Trump and Biden Differ on Taiwan
This article originally appeared on Deutsche Welle. Read the original article here.
TNL Editor: Nicholas Haggerty (@thenewslensintl)
If you enjoyed this article and want to receive more updates on the story in your news feed, be sure to follow our Facebook.
The News Lens International Edition
[ad_2]
