Most Asian economies are headed for contraction

A man eats a snack food on a chair outside a restaurant in the Kowloon-side Evening Shui Po district of Hong Kong early in the morning of July 29, 2020, as new social discrimination measures are implemented that allow only restaurants To combat a new wave of coronavirus infection, serve takeaway meals.

Anthony Wallace | AFP | Getty Images

The Asian Development Bank said that Asia – developing Asia, which includes countries such as China, India, Indonesia and Singapore, would contract for the first time in nearly six decades, as the coronovirus epidemic continues to drive economies around the world.

In its updated Outlook report, ADB stated that GDP in developing Asia will be 0.7% this year. The bank also said that three-quarters of the region’s economies are set to shrink in 2020.

CNB’s “Street Signs Asia” said on Tuesday that the epidemic, which has infected more than 29 million people worldwide, has slowed domestic consumption, affected external demand and hit exports.

“On top of that, the travel ban actually weakens the free flow of people as well as the trade of goods and services,” he said.

In an effort to slow the spread of the virus, some countries have closed borders for non-residents, while most have enforced varying degrees of social sanctions, including periods of total lockdown in locations in India.

South and Southeast Asia

ADB said Southeast Asia was expected to grow 1% for the first year, but is now predicted to contract 3.8% with Thailand, the Philippines and Singapore, with each ADB experiencing a decline of over 6% Is ready. The Philippines and Indonesia have reported the most infections among Southeast Asian countries.

China, where the outbreak of coronovirus was first reported in late December, is the only country expected to record positive growth, although the world’s second-largest economy has been reported in recent years. According to the report, its economy is slowly returning to track, so China is set to register a 1.8% expansion in 2020, well below the earlier forecast of 2.3%.

The level of infection in the country is under control. This is in contrast to the rapid spread in India, which is now the epicenter of the epidemic in Asia in over 4.8 million cases.

ADB said that India is predicted to record 9% decline for calendar year 2020. This was revised down from the earlier forecast of a 4% increase. The following year India’s fiscal year runs from 1 April to 31 March. In the three months between April and June, India’s economy shrank to a steady pace of 23.9% after the national lockdown between April and May.

Growth rebound

Growth will likely rebound in 2021 with developing Asia expected to register a 6.8% expansion. According to the report, India is set to grow 8% for the next calendar year.

Savada told CNBC, “Our baseline assumption is basically the Kovid-19 can be controlled later this year. Once there is a health risk, we can return a strong boom.” He explained that governments in developing Asia and Pacific countries have already announced support measures in excess of $ 3 trillion, some of which are equivalent to 15% of GDP. Many of those countries still have room for further expansion or adjustment policy.

“I think it is very important, to maintain and survive households, especially poor families and vulnerable groups, as well as micro and small enterprises, so that after the control of the health crisis, they perseverance To come back from. ” “The large-scale package helped stabilize the financial markets.”

East Asia, particularly China, data from the ADB showed that large amounts of governments arrived.

But the bank warned in its report that a long wave of Kovid-19 infections could recover and disrupt demand and supply, worsening geopolitical tensions, particularly between the US and China, a The risk remains.

In some economies, a protected weakness could lead to a crisis, the ADB said.