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Coronavirus-ravaged economies in Asia Pacific will make a “swoosh-shaped” recovery next year, the Asian Development Bank (ADB) forecast on Tuesday, but warned that new restrictions to combat contagion could derail the region’s comeback. to growth.
Developing Asia, which stretches 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 lender said with based in the Philippines.
The 0.7 percent contraction in gross domestic product compares with the bank’s previous estimate in June for 0.1 percent growth and will mark “the first contraction in regional GDP since the early 1960s.” said.
“The recession is widespread, and nearly three-quarters of regional economies are expected to contract, the largest share of its kind in the past six decades,” the bank said in the latest update of its forecast.
While the vast region is expected to rebound next year, with GDP projected to grow 6.8 percent, it will be “substantially lower” than anticipated before COVID-19 hit.
“Therefore, the regional recovery will be L-shaped or ‘swoosh’ rather than V-shaped,” the bank said, noting that a protracted pandemic was the main threat to the outlook.
The bank warned that re-imposing heavy restrictions on the virus could hamper recovery and even trigger “financial turmoil.”
“While Asia’s developing economies remain resilient, continued political support is needed to underpin the recovery,” said ADB chief economist Yasuyuki Sawada.
Policy support packages announced in late August had totaled US $ 3.6 trillion, about 15 percent of regional GDP, the bank said.
China, where the virus first appeared late last year before transforming 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 battling the disease, the world’s second-largest economy is forecast to grow 1.8 percent this year and 7.7 percent in 2021, the bank said.
In contrast, India, which is one of the worst affected countries in the world with more than 4.8 million infections despite prolonged lockdowns, is expected to shrink by nine percent in 2020 before expanding by eight percent. cent next year.
“The path and speed of economic recovery in regional economies will depend on many different factors, the most important of which is the ability to control and contain the pandemic,” the ADB said.
Increase in poverty
As regional economies contract this year, the number of poor people is likely to increase by at least 78 million, reversing poverty reduction in the past three to four years, according to the report.
However, inflation is expected to remain “subdued” due to depressed demand and lower oil prices, he said.
Another relatively positive aspect was trade. While the region’s exports had contracted, they had fared better than the rest of the world thanks to increased demand for COVID-related health and electronics supplies. – AFP
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