ADB: Asia growth to fall as coronavirus crisis hits

Regional economic growth in developing Asia will decline sharply in 2020 due to the effects of the coronavirus pandemic, before recovering in 2021, according to the Asian Development Outlook 2020.

The Asian Development Bank report forecasts regional growth of 2.2% in 2020, a downward revision of 3.3 percentage points relative to the 5.5% ADB had forecast in September 2019. Growth is expected to rebound to 6.2% in 2021, assuming that the outbreak ends and activity normalizes. Excluding the newly industrialized economies of Hong Kong, China; the Republic of Korea; Singapore; and Taipei, China, developing Asia is forecast to grow 2.4% this year, compared to 5.7% in 2019, before rebounding to 6.7% next year. 

India’s GDP will slow to 4% in fiscal year 2020, ADB says. It forecasts a recovery in India’s economy in FY2021, with growth of 6.2%, supported by government reform. India’s economy recorded 5.0% growth in FY2019. Risks to the outlook are firmly on the downside. A prolonged COVID-19 pandemic would push the global economy into deep recession and further slow Indian growth. Were the virus to spread widely within the country, economic activity would be severely constrained. 

In China, ADB forecasts economic growth of 2.3% in 2020 for the world’s second-largest economy, following 6.1% growth in 2019, before bouncing back to 7.3% growth in 2021. Data for the first two months of the year indicate double-digit contractions in industry, services, retail sales, and investment, with the evolution of the COVID-19 situation being the main risk facing the economy.