Developing Asia to contract 0.4 percent in 2020, grow by 6.8 percent in 2021

The Asian Development Bank (ADB) projected on Thursday that economic activity in developing Asia, including Laos, would contract by 0.4 percent this year, an improvement from 0.7 percent shrinkage in September.
However, the bank is optimistic that economic activity in this region is expected to see 6.8 percent growth in 2021 as developing Asia moves towards recovery from the effects of the coronavirus pandemic.
“The outlook for developing Asia is showing improvement. Growth projections have been upgraded for the People’s Republic of China and India, the region’s two largest economies,” said ADB Chief Economist Yasuyuki Sawada.
“A prolonged pandemic remains the primary risk, but recent developments on the vaccine front are tempering this. Safe, effective, and timely vaccine delivery in developing economies will be critical to support the reopening of economies and the recovery of growth in the region.”
Pandemic-induced lockdowns and restrictions have been eased at varying levels in the region, with merchandise exports rebounding quickly from substantial declines in the second quarter.
Mobility is also returning to pre-Covid-19 levels in East Asia and the Pacific, where the spread of the virus has largely been contained or prevented in recent months. A recovery in tourism, however, is likely to be delayed, according to the ADB report.
Most of developing Asia’s sub-regions are forecast to contract this year. East Asia is the exception, with an upgraded growth forecast of 1.6 percent for 2020 on the back of faster than expected recoveries in China. East Asia’s growth outlook for 2021 is maintained at 7.0 percent.
Economic growth in Southeast Asia remains under pressure as Covid-19 outbreaks and containment measures continue, particularly in Indonesia, Malaysia, and the Philippines.
In September, the ADB predicted that the growth of Laos’ gross domestic product would contract by 2.5 percent in 2020 after the pandemic disrupted key economic sectors, affecting tourism, foreign investment and the service sector.
However, the bank said growth is expected to rebound to 4.5 percent in 2021, suggesting a slow recovery as the pandemic subsides.
According to the ADB, Southeast Asia’s growth forecast for 2020 is revised down to -4.4 percent from -3.8 percent in September. The sub-region’s outlook for 2021 is also downgraded, with Southeast Asia now expected to grow 5.2 percent next year compared to the 5.5 percent growth forecast in September.
Regional inflation is expected to marginally ease to 2.8 percent in 2020, from the 2.9 percent projected in September, due to depressed demand and low oil prices.
Inflation for 2021 is forecast at 1.9 percent, down from 2.3 percent forecast in September. Oil prices are retained at US$42.50 per barrel in 2020 before increasing to US$50.00 per barrel in 2021.

By Times Reporters
(Latest Update December 14, 2020)