Coronavirus will cause ‘Developing Asia’ to shrink for the first time

As per a report published by the Asian Development Bank, for the first time in nearly six decades, ‘Developing Asia’ will see its economy shrinking. The ongoing coronavirus pandemic will be responsible for this fall-off in the economic output of almost 45 Asia-Pacific countries.

In its very first, Asia-pacific is expected to record a negative quarterly figure since the year 1962. The gross domestic product (GDP) will shrink by 0.7%, the Manila-based bank said on September 15, Tuesday. It has been forecasted to recover only in the year 2021. Lower demands and reduced oil prices have allowed the ADB to put its expected inflation mark at 2.9% for developing Asia nations. The sub-regions will suffer a fall off by 3.8% this year due to the coronavirus pandemic.

In a live streaming brief, Yasuyuki Sawada, the ADB’s chief economist, said, “A contraction this year would be the first since 1962.”

“Developing Asia”

“Developing Asia” is an umbrella term for all the 40 Asia-pacific countries who are the members of the Asian Development bank. This list excludes the advanced economies like New Zealand, Japan, and Australia.

China will buckle trend

China will remain unaffected by the shrink, unlike the previous forecasts. Thanks to China’s booming health care measures and containment of the virus, said the ADB. China’s economy is expected to grow and accelerate to 7.7% in 2021. This is higher than the previous forecast of 7.4%.

India to slip

India’s already hampered economy is expected to contract more. According to ADB’s forecast, the Indian economy is expected to acquire nine percent. As opposed to China, ADP, in its previous estimates on India, expects its economy to contract by four percent.

However, it also has an expected growth of eight percent in 2021.

Trade War to slow down growth

Bilateral relations of China with the United States and India might hamper the growth of the region, ADB mentioned. These tensions between the countries include the trade war between China and the United States and the tech war between India and China. India and China have banned China’s popular TikTok app, which attracted millions of users from both countries.

“Worsening geopolitical tensions could also dent growth”, said Sawada in a separate media briefing.

Recovery

The Asian Development Bank, in its forecast, mentioned that the “Developing Asia” countries might expect a recovery and a growth by an average of 6.8%.  This number is still below the pandemic predictions, ADP informed in an updated Asian Development Outlook report.

Image courtesy of Porcupen/Shutterstock

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