COVID-19 and 2020 growth in Asia
The Asian Development Bank (ADB) has recently released the Asian Development Outlook, its periodical report with new projections for the 2020 and 2021 GDP growth rates in the developing Asian economies.
The new outlook shows how the COVID-19 outbreak has affected the different economies along the Asian continent. Looking at the new forecasted GDP growth for 2020 is clear that the epidemic has had a dramatic negative impact on the growth of each economy and disrupted businesses and other economic activities.
Overall, ADB revised its estimations for the Asian developing regions and forecasts a regional growth of 2.2% for the year 2020, down compared to the 5.2% growth rate estimated in the previous outlook dated December 2019.
The ADB’s projections show that the developing economies in East Asia have been more equipped to handle the effects of the pandemic compared to the ASEAN economies in the Southeast part of Asia. The pre-virus forecast for the 2020 GDP growth in East Asian economies has been revised down from 5.2%, resulting from the previous outlook dated December 2019, to 2.0%.
The People’s Republic of China, the worst-hit economy at the date of the outlook, is expected to grow by 2.3% in 2020. The Chinese economy is the largest in Asia, and the shock derived from the COVID-19 outbreak in the first two months of the year was significant and led to a contraction in the industry, services, sales, and investments. However, China has promptly implemented a wide range of supporting measures for the enterprises and already resumed the majority of its economic activities since the end of February. The manufacturing and service sectors are gradually recovering, and the business activities expectation is increasing.Despite the expected slowdown during the year, the Chinese economy would bounce back in 2021, with a GDP growth forecast of 7.3%.
In India, the GDP growth will remain subdued in 2020; at the date of the outlook, COVID-19 has not yet spread extensively in the country, and the potential effects of the pandemic are still unknown. However, the GDP growth forecast for 2020 has been revised from 6.5% to 4.0%.
The forecast for the 2020 GDP growth in ASEAN economies, which include Thailand, Malaysia, Philippines, and Indonesia, have also been revised downwards, from a pre-virus forecast of 4.7% to 1%, according to the latest outlook.
The COVID-19 pandemic has indeed greatly affected global and regional economies, and each country will experience a contraction or a deceleration of the expected growth in 2020, due to the decline in business activities, trade, and investments. The pandemic will represent a big challenge for the governments over the world, which shall be able to implement supporting measures and provide enterprises and individuals with incentives and subsidies, to minimize, as much as possible, the economic impact and damage afflicted by the outbreak.