ADB says Asia set to recover despite COVID-19
Developing Asia set to grow 7.3% this year despite COVID-19 pandemic
MANILA – With a healthy global recovery and progress on coronavirus disease (COVID-19) vaccines, economic growth in developing Asia will reach 7.3% this year.
This was how the Asian Development Bank (ADB) looks at the region according to their standards.
According to their flagship economic publication, Asian Development Outlook (ADO) 2021 released today, the projected resurgence follows a 0.2% contraction last year. The region’s growth is forecast to moderate to 5.3% in 2022. Apart from the newly industrialized economies of Hong Kong, China, the Republic of Korea, Singapore, and Taipei, China, developing Asia’s economic activity is expected to grow 7.7% this year and 5.6% in 2022.
“Growth is gaining momentum across developing Asia, but renewed COVID-19 outbreaks pose a threat to recovery,” said ADB Chief Economist Yasuyuki Sawada. “Economies in the region are on diverging paths. Their trajectories are shaped by the extent of domestic outbreaks, the pace of their vaccine rollouts, and how much there are benefitting from the global recovery.”
According to the ADB, rising exports are boosting some economies in developing Asia with the strengthening of global economic activity, with a rebound in manufacturing. The ADB said the progress in the production and delivery of COVID-19 vaccines contributed to the momentum although the pandemic remains the biggest risk for the region as potential delays in vaccine rollouts or new outbreaks could stifle growth. Other risks considered are increasing geopolitical tensions, production bottlenecks, financial turmoil from tightening financial conditions, and long-term scarring in learning losses due to school closures.
The ADB said most economies in developing Asia will see vigorous growth this year and in 2022. Central Asian economies meanwhile are forecast to grow 3.4% on average this year and 4.0% next year. The trade-dependent economies of Southeast Asia will recover, with the subregion projected to grow 4.4% this year and 5.1% in 2022 after contracting 4.0% in 2020.
Pacific economies yet affected by global travel restrictions and a collapse in tourism, will post modest growth this 2021 at 1.4% before attaining 3.8% by 2022.
Strong exports and a gradual recovery in household consumption will trigger economy activity in the People’s Republic of China (PRC) this year. The country’s gross domestic product (GDP) is projected to expand to 8.1% in 2021 and 5.5% in 2022 while East Asia’s GDP will grow 7.4% in 2021 and 5.1% in 2022.
India, though severely affected by the surge in COVID-19 cases, is expected to grow 11.0% in 2021 which ends on March 31,2022 anchored on its strong vaccine drive. The surge in COVID-19 and the crisis in health facilities may put the recovery at risk. India’s GDP is expected to grow 7.0% in 2022. This year’ South Asia’s GDP is expected to recover to 9.5% following a 6.0% contraction last year before moderating to 6.6% next year.
The ADB projects inflation in developing Asia to fall to 2.3% from 2.8% last year as food-price pressures ease in India and the PRC. The region’s inflation rate is estimated to rise to 2.7% in 2022.
The same report examines the costs of pandemic0induced school closures across developing Asia. Countries are utilizing distance learning, but this is only partially effective as many students lack access to computers and the internet.
“These disruptions will affect the skills of students acquire and, eventually their productivity and earnings as future workers. Learning losses range from 8.0% of a year of learning in the Pacific , where schools have most stayed open, to 55% in South Asia where school closures have been the longest,” the ADB statement added.
Accordingly, the present value of students’ future earning reductions is estimated at US$1.25 trillion for developing Asia which is equivalent to 5.4% of the region’s GDP for 2020. (Melo M. Acuña)