© Reuters. Outbreak of coronavirus disease (COVID-19) in Calcutta
By Karen Lema
MANILA (Reuters) – The development of the already slowed growth in Asia is expected to weaken considerably this year. This is caused by the aftermath of the coronavirus pandemic before recovering strongly next year, the Asian Develpoment Bank (ADB) said on Friday.
The Manila-based lender said its base forecast calls for growth in the development of Asia, a group of 45 economies that include China and India, to 2.2% in 2020, compared to an earlier forecast of 5.2% that the Corresponds to previous year.
"This will be the lowest growth that Asian development has seen in 22 years or since the Asian financial crisis," said Abdul Abiad, director of the ADB's Macroeconomic Research Department.
The region is expected to recover and grow by 6.2% in 2021, the ADB said in its report on the Asian development outlook.
The growth estimate for China, where the virus surfaced in December, was reduced from 5.8% in the previous year to 2.3%, due to the bleak economic activity in the first two months of the year.
However, the growth of the second largest economy in the world should recover strongly to 7.3% in 2021, according to the ADB.
After a first outbreak practically brought China to a standstill last month, more and more countries and areas have reported an increase in infections and deaths, blocking entire regions.
Measures to curb the highly contagious virus that causes a respiratory disease called COVID-19 have hit the global economy and have led economists to believe that the world is heading for a deep recession.
"This is a public health crisis and must be addressed before the situation normalizes," Abiad told Reuters. To curb the pandemic, governments must ensure that "the weakest are not left behind."
Given the rapidly changing situation, the ADB raised its estimate of the global cost of the "worst pandemic in a century" to $ 2.0 trillion to $ 4.1 trillion, a 2.3% drop in global gross domestic product (GDP) Corresponds to 4.8%. Last month economic losses were estimated at $ 77 to $ 347 billion.
Growth in South Asia's largest economy, India, is likely to remain subdued after a sharp slowdown in 2019. The expansion for the 2020 financial year slowed further to 4.0%, before increasing to 6.2% in the 2021 financial year, said the ADB.
Southeast Asian growth this year is expected to track China's key trading partner weakness, slowing from 4.4% in the previous year to 1.0%, but picking up momentum again and ending the year with 4.7% growth.
The ADB raised its inflation forecast for the development of Asia slightly from 3.1% previously to 3.2%. Falling food prices in the second half of the year should, however, lead to a slower inflation rate of 2.3% next year.