ADB Forecasts a Recession for Developing Asian Economies in 2020

MANILA, KOMPAS.com – The forecast for developing Asian economies is looking unfavorable with the Asian Development Bank (ADB) predicting the region will face a recession.

Developing economies in Asia will contract in 2020 which would be the first downturn in almost 60 years, according to the ADB.

The ADB’s outlook projects that Asian economies will contract 0.7 percent this year before recovering to 6.8 percent growth in 2021.

Conditions could deteriorate further, however, if the coronavirus pandemic worsens significantly, the regional lender said.

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The update downgrades growth estimates for many countries in the region, where outbreaks of coronavirus have surged in some countries, such as the Philippines and Indonesia.

The report said that China, where the pandemic began, has already begun to recover and will see its economy grow 1.8 percent this year and 7.7 percent in 2021.

The 6.1 percent growth for China's economy in 2019 was the slowest pace in decades.

Asia's status as a production base for many medical products, digital devices and optical equipment helped to cushion the blow to trade from the pandemic downturn, the report noted.

Nonetheless, the downturn is the worst since the early 1960s, the report said.

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“This has set back efforts to life hundreds of millions of people in our region out of poverty," said the ADB's chief economist, Yasuyuki Sawada.

Governments in many countries have imposed border controls, lockdowns, and other restrictions to stem the spread of the coronavirus and prevent more outbreaks.

But such measures come at a huge economic cost.

To help compensate, regional governments have promised $3.6 trillion, equivalent to about 15 percent of regional economic activity, in subsidies, loans and other support for individuals and businesses.