The Asian Development Bank (ADB) updated its outlook report. According to ADB, developing Asia which includes countries like India, China, Indonesia, and Singapore will contract in 2020 for the first time in about six decades. It makes sense as the coronavirus pandemic continues the economies around the world. The state of the global economy was not ideal even before the pandemic. However, it created additional problems for the countries.
According to the report, gross domestic product (GDP) in developing Asia will contract 0.7% in 2020. It is worth mentioning that, three-fourths of the region’s economies are set to shrink this year. The Asian Development Bank made the decision to downgrade its GDP forecasts for those countries.
Unfortunately, the number of coronavirus cases surpassed 29 million and this number continues to rise, and it is hard to tell how long it would take to deal with it. The pandemic had a negative impact on domestic consumption as well as on the exports. Moreover, travel bans undermine the free flow of people as well as goods and services trade.
Governments around the world implemented various restrictions to slow the spread of the virus. Some of the countries went further and implemented total lockdowns. As a result, after taking into account all factors, it is not surprising that the economy of China and other countries will contract in 2020.
Asian Development Bank and main findings
Interestingly, Southeast Asia was expected to grow 1% for the year. However, according to the updated data, the bank expects Southeast Asia to contract 3.8%. Furthermore, Thailand, the Philippines as well as Singapore will have to deal with bigger losses.
The Philippines and Indonesia reported the most number of infections among the Southeast Asian countries.
Notably, despite the fact that the coronavirus originated in China, the ADB expects the country to register positive growth. However, this year China won’t be able to reach great results. According to the report, China is set to register a 1.8% expansion in 2020. The previous forecast was 2.3%.
However, in the case of India, the pandemic is not under the control. Moreover, India is now pandemic’s epicenter in Asia with more than 4.9 million cases.
Based on the information provided by the Asian Development Bank, the country is expected to register a 9% decline for the calendar year of 2020. The previous forecast was more optimistic as the bank expected the country to register positive growth. People should take into account that, India’s fiscal year runs from April 1 to March 31 the following year. Importantly, in the three months between April and June, India’s economy as its steepest pace of 23.9%.
Hopefully, growth will likely rebound in 2021 with developing Asia expected to register a 6.8% expansion. Interestingly, the ADB expects India to register an 8% growth for the next calendar year.
The Asian Development Bank warned that a prolonged wave of coronavirus infections could affect recovery. Moreover, the pandemic could further disrupt demand and supply. Geopolitical tensions especially between the U.S. and China represent another issue.