ADB: Developing Asia to contract 0.4% in 2020, grow by 6.8% in 2021

Economic activity in developing Asia is forecast to contract by 0.4% this year, before picking up to 6.8% in 2021 as the region moves toward recovery from the effects of the coronavirus disease, according to researc by the Asian Development Bank.

The new growth forecast is an improvement from the -0.7% gross domestic product growth forecast in September, while the outlook for 2021 remains unchanged. But prospects are diverging within the region, with East Asia set to grow this year while other subregions are contracting.

East Asia has an upgraded growth forecast of 1.6% for 2020 on the back of faster than expected recoveries in the PRC and Taipei,China. The region's growth outlook for 2021 is maintained at 7.0%.

South Asia’s GDP is forecast to contract by 6.1% in 2020, revised up from the 6.8% contraction expected in September. Growth in South Asia is forecast to rebound to 7.2% in 2021. The growth forecast for India, the subregion’s largest economy, for fiscal year 2020 is raised to -8.0%, from the -9.0% projection in September, while outlook for FY2021 is kept at 8.0%.

Economic growth in Southeast Asia remains under pressure as COVID-19 outbreaks and containment measures continue, particularly in Indonesia, Malaysia, and the Philippines. The subregion’s growth forecast for 2020 is revised down to -4.4% from -3.8% in September. The subregion’s outlook for 2021 is also downgraded, with Southeast Asia now expected to grow 5.2% next year compared to the 5.5% growth forecast in September.

The outlook for the Pacific is unchanged for both 2020 and 2021 at -6.1% and 1.3%, respectively. Central Asia’s growth forecast for 2020 remains at -2.1%, but outlook for 2021 is slightly downgraded to 3.8% from the 3.9% growth projection in September.