Developing economies in Asia will shrink at a slower pace than forecast this year on improved outlooks for India and China, according to the Asian Development Bank.
The ADB forecasts economies in developing Asia are expected to contract by 0.4 per cent in 2020, an improvement on the bank’s forecast in September of a 0.7 per cent year on year decline.
Its Asian Development Outlook report forecasts that the Chinese economy will recover at a faster rate than previously estimated. China’s economy is set to grow by 2.1 per cent in 2020, up from the previous estimate of 1.8 per cent on recoveries for both manufacturing and services.
The outlook for India has improved after strict lockdowns were eased. “With the pandemic possibly having peaked in mid-September, many high-frequency indicators are better than a year ago or back to pre-Covid levels, indicating accelerating economic normalisation,” the ADB said.
It forecasts the Indian economy will contract by 8 per cent in 2020, down from the previous estimate of a 9 per cent decline.
The bank left its growth forecast for 2021 at 6.8 per cent for developing Asia.
Taiwan’s economy is among those that have shown strength
Recovery from the pandemic varies across the region, the ADB said as parts of south-east Asia struggle to contain the virus, limiting economic activity.
Containment measures are less strict in parts of East Asia and the Pacific that have been successful in limiting the spread of the virus.
East Asia is expected to grow by between 1.3 and 1.6 per cent in 2020, the only sub-region projected to record growth, thanks to strength in China, South Korea and Taiwan.
Exports from the region have rebounded to similar levels recorded last year, the ADB said. Shipments of medical supplies, electronic and household goods have offset the fall in demand for other items caused by a second wave of infections in the US and Europe.
Tourism, a mainstay for many countries in the region, remains “abysmal” with travel restrictions in place to stem the spread of coronavirus.
Tourist arrivals are down by between 88 per cent and 100 per cent across Asia.