Developing economies in Asia will contract in 2020, the first such downturn in nearly 60 years, the Asian Development Bank said Tuesday in an update to its forecasts.
The update of the ADB’s outlook estimates the regional economy will contract 0.7% this year, recovering to 6.8% growth in 2021.
Conditions could deteriorate further, however, if the coronavirus pandemic worsens significantly, the regional lender said. The update downgrades growth estimates for many countries in the region, where outbreaks of coronavirus have surged in some countries, such as the Philippines and Indonesia.
The report said that China, where the pandemic began, has already begun to recover and will see its economy grow 1.8% this year and 7.7% in 2021. The 6.1% growth for China's economy in 2019 was the slowest pace in decades.
Asia's status as a production base for many medical products, digital devices and optical equipment helped to cushion the blow to trade from the pandemic downturn, the report noted.
Nonetheless, the downturn is the worst since the early 1960s, the report said.
“This has set back efforts to life hundreds of millions of people in our region out of poverty," said the ADB's chief economist, Yasuyuki Sawada.
Governments in many countries have imposed border controls, lockdowns and other restrictions to stem the spread of the coronavirus and prevent more outbreaks. But such measures come at a huge economic cost.