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.
About the author
Boris Sullivan is a business news editor based in Hong Kong. He has over 15 years of experience in covering the latest trends and developments in the Asian markets, as well as the global economy.