Developing Asia is expected to contract less than expected as China and India post economic recovery.
Developing Asia is set to contract this year, but likely less than previously thought as China’s economy is enjoying a faster-than-expected recovery, the Asian Development Bank (AfDB) said on Thursday. .
Economic growth in developing Asia, a group of 45 countries in the Asia-Pacific region, is expected to decline 0.4 percent this year, the AfDB said in an update to the September Asian Development Outlook report, below its previous estimate of a decrease of 0.7%. For 2021, the region is expected to grow 6.8%, the bank said.
The decline expected this year – the result of lockdowns imposed to fight COVID-19 – would be the region’s first in nearly six decades. The AfDB said the protracted pandemic, which has infected nearly 68 million people and killed more than 1.5 million, remains a risk.
Developing Asian sub-regions are expected to contract this year, with the exception of East Asia, which is expected to grow 1.6%, more than previously expected thanks to faster recoveries than expected in China and Taiwan.
China, where the coronavirus first appeared a year ago, is expected to grow 2.1% this year, faster than the AfDB’s September estimate of 1.8%. The AfDB maintained its growth forecast of 7.7% for the world’s second-largest economy in 2021.
“A protracted pandemic remains the main risk, but recent developments on the vaccine front are tempering this situation,” AfDB Chief Economist Yasuyuki Sawada said.
In recent weeks, the experimental vaccines developed by Pfizer-BioNTech and Moderna have shown 95% efficacy in late stage trials, while inoculation AstraZeneca-Oxford University has also shown promising results.
The economic threat remains strong
The AfDB still expected the Indian economy to rebound with 8.0% growth next year, emerging from an expected 8.0% contraction this year, less than the decline of 9.0 % previously expected.
Southeast Asia remains under pressure, as virus outbreaks and restrictions continue in countries like Indonesia, Malaysia and the Philippines, prompting the AfDB to downgrade its forecast. growth for 2020 and 2021.
Southeast Asia faces a bleaker outlook, with this year’s economic output expected to fall deeper by 4.4%, before rising 5.2% next year. The bank previously forecast 5.5% growth in Southeast Asia.
Regional inflation this year is expected to decline slightly to 2.8% from a previous estimate of 2.9% and slow further to 1.9% in 2021.