Regional economic growth in developing Asia will decline sharply in 2020 due to the effects of the novel coronavirus (COVID-19) pandemic, before recovering in 2021, according to the Asian Development Outlook (ADO) 2020, the Asian Development Bank’s (ADB) annual flagship economic publication.
Excluding Asia’s high-income newly industrialized economies, growth will drop from 5.7% to 2.4% this year before recovering to 6.7% next year, says ADB.
Nine Asian economies that rely on tourism and commodities are likely to shrink, the ADB said, and the hardest hit would be Thailand.
These economies are: Thailand (-4.8%), Hong Kong (-3.3%), the Maldives (-3.0%), Timor Leste (-2.0%), Fiji (-4.9%), Vanuatu (-1.0%), Cook Islands (-2.2%), Palau (-4.5%) and Samoa (-3.0%).
Restrained largely by slowing exports, Thailand posted paltry growth at 2.4% last year. GDP growth is likely to slow further to –4.8% this year but could pick up to 2.5% in 2021. Risks to the growth forecast remain tilted to the downside as COVID-19 could be especially damaging to an economy heavily dependent on international trade and tourism.
Southeast Asia will track the PRC and decelerate to 1.0% growth in 2020
All economies in the subregion will endure a growth slowdown in 2020 because of COVID-19 and a consequent global slump, especially given their strong trade and investment ties with a slowing PRC.
Thailand, the second-largest economy in the subregion, will likely contract by 4.8% this year, continuing a steady slide in recent years.
Growth in Southeast Asia will decelerate from 4.4% in 2019 to 1.0% in 2020 before rebounding to 4.7% in 2021. All 11 economies in the subregion will post lower growth in 2020 than in 2019 because of COVID-19, especially considering the subregion’s strong trade and investment ties with the PRC.
Indonesia, the largest economy in the subregion, will decelerate from 5.0% in 2019 to 2.5% this year and bounce back to 5.0% in 2021. Tourism-dependent Thailand, the second largest economy in the subregion, is forecast to reverse 2.4% expansion in 2019 with 4.8% contraction before recovering to 2.5% in 2021.