CORONAVIRUS-RAVAGED economies across the Asia Pacific will make a "swoosh-shaped" recovery next year, the Asian Development Bank forecast today, but it warned that further restrictions to combat the contagion could derail the region's return to growth.
Yasuyuki Sawada, chief economist at the Asian Development Bank, said the pandemic, which has now infected more than 29 million people worldwide, has slowed domestic consumption, affected external demand and hurt exports.
Other downside risks include increasing public and private debt levels that could affect technology and infrastructure investment, as well as rising non-performing loans caused by the pandemic that could further weaken the financial sector and its ability to support economic growth.
He said, "The expansion of capacity to control, investigate, monitor and treat the epidemic is crucial for the growth of the economy in the next financial year and beyond". However, Goldman Sachs has estimated the contraction at 14.8 per cent.
Fiji's economy is expected to shrink by 19.5%, while the Maldives is likely to see a 20.5% contraction.
"Despite significant pressure on the health and pandemic management systems, the government has managed the economy well with appropriate economic stimulus and social protection measures, ensuring basic services and commodities for the poor and vulnerable. The fiscal deficit is expected to rise significantly in FY2020-21 as government revenues fall and expenditures rise", it added.
It attributes the positive growth to the government's success in containing the pandemic.
These efforts will promote foreign investment, incentivise global supply chains to re-allocate to India, and create manufacturing hubs across the country.
In India, where lockdowns have stalled private spending, GDP will shrink by 9 per cent this year, sharply down from June's forecast of -4 per cent, the ADB said.
The ADB predicted Korea's inflation to remain muted in 2020, with both demand and commodity prices subdued, and then pick up in 2021.
In its updated forecast report, the Asian Development Bank said that the gross domestic product in developing Asia will contract by 0.7% this year.
"Developing Asia", which groups 45 countries in Asia-Pacific, is expected to contract 0.7% this year, the ADB said, forecasting the first negative quarterly figure since 1962.
China, where the virus first emerged late previous year before morphing into a pandemic that has infected more than 29 million people worldwide, was one of the few economies to buck the downward trend in the region. Growth will rally to 6.8% in 2021, in part because growth will be measured relative to a weak 2020.
The Indian Express is now on Telegram.