The Asian Development Bank cut its growth projection for developing Asia due to the effects of the novel coronavirus, or covid-19 pandemic.
In the Asian Development Outlook, released Friday, the ADB said regional economic growth will decline sharply this year before recovering in 2021.
The lender forecast developing Asia to grow 2.2 percent in 2020 compared to the previous projection of 5.2 percent. Assuming that the outbreak ends and activity normalizes, growth is expected to rebound to 6.2 percent in 2021.
Excluding Asia’s high-income newly industrialized economies, growth will drop from 5.7 percent to 2.4 percent this year before recovering to 6.7 percent next year.
“The evolution of the global pandemic—and thus the outlook for the global and regional economy—is highly uncertain,” ADB Chief Economist Yasuyuki Sawada. “Growth could turn out lower, and the recovery slower, than we are currently forecasting.”
Although China’s growth will slow sharply to 2.3 percent this year due to the coronavirus outbreak, the economy is set to rebound to an above normal 7.3 percent next year. Earlier, the bank had projected China to grow 5.8 percent in 2020.
In India, the ADB said measures to contain the spread of the virus and a weaker global environment this year will offset the benefits from recent tax cuts and financial sector reforms. Growth in India is forecast to slow to 4.0 percent in fiscal year 2020 before strengthening to 6.2 percent in FY 2021.
Growth in South Asia will decelerate to 4.1 percent in 2020 and then recover to 6.0 percent in 2021, largely tracking the trend in the dominant Indian economy, the lender said.
At the same time, Southeast Asia will track China and slow to 1.0 percent growth in 2020 and to grow 4.7 percent next year, said ADB.
According to the lender, central Asia will decelerate under covid-19 after steady acceleration in recent years. Growth in the sub-region will drop to 2.8 percent in 2020 before expanding 4.2 percent in 2021.
The Pacific will be hard hit by the pandemic and resulting global slowdown. Combined output in the sub-region is forecast to decline by 0.3 percent in 2020.
Inflation in developing Asia will climb further to 3.2 percent in 2020, but declining food prices in the latter half of the year will set the stage for easing inflation in 2021.
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