Passengers wear masks queue to enter the Ninoy Aquino International Airport in Paranaque, Metro Manila, amid fears of coronavirus disease (COVID-19) spreading in Philippines, March 18, 2020. (Photo: Agencies)
The regional economic growth in developing Asia will decline sharply in 2020 due to the effects of the COVID-19 pandemic before recovering in 2021, according to a new report by the Asian Development Bank (ADB) released on Friday.
The report, Asian Development Outlook (ADO) 2020, forecasted the regional growth of 2.2 percent in 2020, a downward revision of 3.3 percentage points relative to the 5.5 percent ADB forecasted in September 2019.
The report said that the growth is expected to rebound to 6.2 percent in 2021, assuming that the outbreak ends and activity normalizes.
ADO is the annual flagship economic publication of the Manila-based bank.
Excluding the newly industrialized economies of China's Hong Kong Special Administrative Region, South Korea, Singapore, and China's Taiwan, the report forecasts developing Asia to grow 2.4 percent this year, compared to 5.7 percent in 2019, before rebounding to 6.7 percent in 2021.
"The evolution of the global pandemic -- and thus the outlook for the global and regional economy -- is highly uncertain," ADB Chief Economist Yasuyuki Sawada said, adding "the growth could turn out lower, and the recovery slower, than we are currently forecasting."
"For this reason, strong and coordinated efforts are needed to contain the COVID-19 pandemic and minimize its economic impact, especially on the most vulnerable," Sawada said.
Underpinning much of the weakness across Asia is a deteriorating external environment, with growth stagnating or contracting in the major industrial economies of the United States, the Euro area, and Japan. Some commodity and oil exporters, such as those in Central Asia, will be hit by a collapse in commodity prices. Brent oil prices are expected to average $35 per barrel this year, down from $64 in 2019.
The report also said that all of developing Asia's subregions will see growth weaken this year because of weak global demand, and in some economies because of domestic outbreaks and containment policies.
It further said that subregions that are more economically open like East and Southeast Asia, or tourism-dependent like the Pacific, will be hard hit. Economic activity in the Pacific subregion is expected to contract by 0.3 percent in 2020 before recovering to 2.7 percent in 2021.
A special section of the report provided an update on the likely economic impact of the COVID-19 outbreak on developing Asia's economies, and on sectors within these economies.
According to the report, the global cost of the pandemic could range from $2.0 trillion to $4.1 trillion, equivalent to a loss of between 2.3 percent to 4.8 percent of global gross domestic product.
These estimates, which update earlier ADB research released on March 6, reflect the now-global nature of the pandemic, the extensive use of containment policies and travel bans worldwide.
"It should be noted that the estimate does not take into account such factors as supply disruptions, interrupted remittances, urgent health care costs, and potential financial disruptions, as well as the long-term effects on education and the economy," ADB said.