MANILA – The Asian Development Bank (ADB) forecast on Thursday a barely growth of only 0.1% in developing Asia, as pandemic obstructs economic activities in the region due to COVID-19.
ADB explained in its new set of forecast that this was a great slip from the 2.2% initial forecast in the month of April and seen as the slowest growth in the region since 1961.
They also said that while they see a higher growth outlook for the region in 2021, which is mainly due to weak numbers this year, still, this would not be a V-shaped recovery.
“Governments should undertake policy measures to reduce the negative impact of COVID-19 and ensure that no further waves of outbreaks occur,” ADB Chief Economist Yasuyuki Sawada said.
Inflation in the developing Asia is anticipated at 2.9% in 2020, less difference from initial forecast growth of 3.2% in April. Inflation is expected to ease to 2.4% by 2021.
Meanwhile, newly industrialized economies of Hong Kong, China, South Korea, Singapore, and Taiwan is expected to grow by 0.4% on the rest of the year, and about 6.6% in 2021.
The economy in East Asia is forecast to grow by 1.3% in 2020 and seen as the only sub-region in Asia to experience growth this year. 6.8% growth is expected next year.
“Japan having recorded in the fourth quarter of 2019, following October’s consumption tax hike, its worst contraction in more than 5 years—saw contraction deepen further in the first quarter of 2020 to 3.4%,” report said.
The report also said that a slight recovery bracketing the turn of the year was immediately reversed as the pandemic slowed economic activity significantly in March, such that Q1 private consumption fell by 2.8%, investment by 4.3%, and exports by a sharp 21.8%.
The supply disruption maybe less damaging in Japan compare to other countries, but a severe hit to consumption and external demand are expected and will further drag down growth in the second quarter of 2020, the report explained. (By STANLEY BUENAFE GEJETE / PHOTO CREDIT: ASIAN DEVELOPMENT BANK)