ADB Forecasts a Recession for Developing Asian Economies in 2020

But small companies that account for most businesses in the region are short of capital to weather the crisis, the ADB said.

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It expects a recovery to be “L-shaped", or “swoosh-shaped" rather than V-shaped.

Even with a recovery, economies will be “substantially below expectations before Covid-19", Sawada said.

A prolonged pandemic could put countries into debt crises or destabilize their financial markets, the report said.

“Another risk would be worsening geopolitical tensions, most notably potential for US–PRC (China) friction over trade and technology to intensify," it said.

South and Southeast Asian countries have seen some of the worst devastations from the pandemic, with Malaysia, the Philippines, Singapore and Thailand logging double-digit contractions in the April-June quarter from a year earlier.

All of their economies are expected to shrink by 5 percent or more this year.

Read also: The Philippines Spirals into Recession Following Months-Long Lockdowns

Strong government spending will be crucial to support their recoveries, the report said.

The ADB said that ensuring health systems are improved is also vital for sustained growth.

“Physical and mental wellness has taken a battering during the crisis," said Donghyung Park, an ADB economist said.

“A sound mind and a sound body, of course, that's the first step to rebuilding the economy and the society." 

(Writer: Elaine Kurtenbach) 

Source: https://apnews.com/429fc74c1468df6391eab775bc9a8f30