MANILA (BLOOMBERG) - Developing Asia's economy will contract this year by less than previously estimated as it begins recovering from the coronavirus pandemic, according to the Asian Development Bank.
The region's gross domestic product will shrink 0.4 per cent this year, an improvement from the 0.7 per cent drop forecast in September, the ADB said in a supplement to its Asian Development Outlook, released on Thursday (Dec 10). It kept the region's growth projection at 6.8 per cent for 2021.
Prospects are diverging within the region, with East Asia set to grow this year while other subregions are contracting, the Manila-based bank said. China's economic forecast for 2020 was raised to 2.1 per cent growth from 1.8 per cent estimated in September, while India's projection was lifted to an 8 per cent contraction from -9 per cent previously expected. Next year, China's GDP is seen growing by 7.7 per cent and India's by 8 per cent.
Southeast Asia's economic forecast was lowered to a 4.4 per cent contraction this year amid reduced projections for Indonesia, Malaysia and the Philippines. The subregion remains under pressure as virus outbreaks and containment measures continue, the ADB said.
A "prolonged pandemic remains the primary risk," said Yasuyuki Sawada, ADB's chief economist, who in September had noted that a contraction this year would be developing Asia's first since 1962. "Safe, effective, and timely vaccine delivery in developing economies will be critical to support the reopening of economies and the recovery of growth in the region."
East Asia will see economic growth of 1.6 per cent this year - up from 1.3 per cent previously estimated - amid recoveries in China and Taiwan.
While lockdowns and movement restrictions have eased, a recovery in tourism is likely to be delayed, said the report.
Inflation in developing Asia is now projected at 2.8 per cent this year, down from 2.9 per cent forecast in September, on depressed demand and low oil prices. Consumer prices are seen rising 1.9 per cent next year.