ADB: Only 0.1% economic growth expected in developing Asia in 2020

MANILA, June 18- The Asian Development Bank (ADB) forecast a growth of only 0.1% in developing Asia as containment measures against COVID-19 pandemic obstructs economic and business activities in the region on Thursday . 

ADB brought it down from the 2.2% initial forecast in April. It is seen as the slowest growth in the region since 1961. 

Shocks from multiple waves of outbreaks in the coming period are also expected and sovereign debt and financial crises cannot be ruled out. 

ADB said growth in 2021 is expected to rise to 6.2% based on its initial forecast last April, but gross domestic product (GDP) levels in 2021 will remain below what had been envisioned and below pre-crisis trends. 

Inflation in developing Asia is forecast at 2.9% in 2020, down from the initial forecast of 3.2% in April. Depressed demand and lower oil prices affecting economic behavior reflected in the second quarter of 2020. Inflation is expected to ease to 2.4% by 2021. 

The economy in East Asia is forecast to grow 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. 

India in the South Asian region on the other hand is calculated to shrink by 3.0% in 2020 compared to the initial 4.1% growth predicted in April. Even 2021’s growth prospects changed from the initial 6.0% in April to only 4.9%. 

Economies in Southeast Asia are expected to grow only 2.7% this year before reaching 5.2% in 2021. 

“Contractions are forecast in key economies as containment measures affect domestic consumption and investment, including Indonesia (-1.0%), the Philippines (-3.8%), and Thailand (-6.5%). Viet Nam is forecast to grow 4.1% in 2020. While that is 0.7 percentage points lower than ADB’s April estimates, it is the fastest growth expected in Southeast Asia,” the ADB report said. 

Central Asia's economic activity is expected to contract by 0.5% compared to the 2.8% growth forecast in April as a result of trade disruptions and low oil prices. Growth is forecast to recover to 4.2% in 2021.

Trade flows and decline in tourism affected the Pacific sub-region economy . “The sub-regional economy is forecast to contract by 4.3% in 2020 before rising to 1.6% growth in 2021,” ADB said.