Recovery seen, risks identified as the region battles COVID-19
Asian Development Bank sees recovery in different ways
MANILA – As the COVID-19 pandemic continues, the Asian Development Bank said recovery in tourism is taking longer though regional merchandise exports have recovered.
In its Asian Development Outlook Supplement, the ADB said after contracting in May by 16% year on year, Asia’s exports have recovered lately to levels similar to last year.
“Tourism exports remain abysmal as many travel restrictions to contain the pandemic remain in place,” the statement clearly said as available data revealed declines in tourist arrivals ranged from 88% to 100% as prospects for quick recovery in global tourism remain low-key.
The ADB referred to a survey made by the International Air Transport Association last August which revealed half of the respondents said even after restrictions were lifted “they would wait for six months to a year or longer before traveling.”
Developing Asia, to which the Philippines belongs, is projected to contract by 0.4% in 2020, less than the 0.7% contraction predicted in September as contraction is still expected in all subregions except for East Asia.
Regional growth will reach 6.8% next year though output will remain below what was foreseen before the pandemic.
The ADB says a prolonged pandemic is still the main risk to the outlook as it may derail recovery and undermine stability in some economies. With the progress in developing vaccines, it somehow moderates the risks. However, vaccines need not only be safe and effective but should reach the developing economies at the soonest for them to equitably share from its promised benefits.
The same report disclosed another risk for the region is the worsening geopolitical tensions, “most notably intensified friction” between the United States and the People’s Republic of China on trade and technology.
“Recent US election results may bring more predictability and multilateral approaches to resolving tensions between the world’s two largest national economies, but full reconciliation will be a challenge,” the statement added.
East Asia, the largest subregional economy in developing Asia has remained the only one projected to grow this year with the forecast upgraded from 1.3% to 1.6%. Next year, it is expected to grow by 7.0%.
“The PRC expanded its GDP by 4.9% in the third quarter (Q3) of 2020, restoring growth in the first three quarters to 0.7%,” the statement revealed. The ADB noted recovery in the PRC was faster in industry than services as catering and accommodation were seen catching up slowly. The value added in industry for the first ten months of the year grew by 1.8% in real terms as it reached 6.9% in October as retail sales declined by an estimated 7.6%.
It said the PRC is expected to grow by 2.1% in 2020, more than the 1.8% forecast in the Update. The revision has included the consistent fiscal and monetary support, “though another round of monetary easing seems unlikely,” the report added.
Meanwhile, the ADB said the Philippine economy contracted by 10.0% from January to September this year which reflected the muted consumer and business activity and confidence under the pandemic and the mitigation measures.
Unemployment has improved but still high at 10.0% in July with a decline in household consumption eased from 15.3% in Q2 to 9.3% in Q3 as the country’s economy gradually reopened as remittances from overseas Filipinos increased. The unemployment rate improved to 8.7% in October. However, fixed investment fell by 36.5% in Q2 and 37.1% in Q3. An increase in government consumption was noted but at a decelerated pace. Exports contracted less than imports, mitigating GDP contraction. The. GDP forecast for the year is downgraded to 8.5% due to a decrease in household consumption and investment fell more than expected. The forecast for 2021 has been maintained at 6.5% growth on the assumption that public investment picks up and the global economy improves. (Melo M. Acuña)