MANILA: Coronavirus-ravaged economies across the Asia Pacific will contract this year for the first time since the early 1960s, and a “swoosh-shaped” recovery next year could be derailed by a prolonged pandemic, the Asian Development Bank (ADB) forecast on Tuesday.
Developing Asia – stretching from the Cook Islands in the Pacific to Kazakhstan in Central Asia – is expected to contract by 0.7 per cent in 2020, marking “the first regional GDP contraction since the early 1960s” and throwing tens of millions of people into poverty, the Manila-based organisation said.
In June, it estimated economies would expand 0.1 per cent.
Across the board downturn
“The downturn is across the board, with almost three-fourths of regional economies projected to contract – the largest such share in the past six decades,” the bank said in the latest update to its outlook.
While the vast region is expected to bounce back next year, with GDP projected to grow 6.8 per cent, it will be “substantially smaller” than forecast before Covid-19 struck.
“The regional recovery will be L-shaped or ‘swoosh-shaped’ rather than V-shaped,” the bank said, noting a prolonged pandemic was the main threat to the outlook.
The bank warned that reimposing tough virus restrictions could hamper recovery and even trigger “financial turmoil”.
“While economies in developing Asia remain resilient, continued policy support is needed to underpin recovery,” ADB Chief Economist Yasuyuki Sawada said.