ADB calls for innovation, coronavirus expected to stunt Asia growth to 2.2%
TOKYO, NNA – The Asian Development Bank has called on developing Asian economies to adopt innovation as a timely growth strategy as it sharply downgraded Asia's overall growth this year from the previous forecast of 5.5 percent to 2.2 percent.
However, it expects the region to rebound to 6.2 percent in 2021 if the current coronavirus pandemic is brought under control by then.
The revised forecast for developing countries alone, excluding South Korea, Hong Kong, Taiwan and Singapore, has seen it dropped from 5.7 percent to 2.4 percent this year before recovering to 6.7 percent next year, said the bank in its outlook report released on Friday.
"In these difficult times, when challenges to growth abound, innovation is critical to inclusive and environmentally sustainable growth. While some economies in developing Asia are near or at the global innovation frontier, many others lag behind," it said.
It highlighted key drivers of innovation such as sound education systems, innovative entrepreneurship, deeper capital markets and dynamic cities that bring together top universities and forward-thinking firms.
Global demand weakened by the pandemic will particularly hit the more open sub-regions and tourism-dependent economies like those in the Pacific, said ADB.
Growth in East Asia will slide from 5.4 percent in 2019 to 2.0 percent in 2020 before re-accelerating to 6.5 percent in 2021.
ADB said that the novel coronavirus outbreak, which first hit China, will drag the world's second biggest economy's growth down to 2.3 percent in 2020 before strengthening to 7.3 percent next year. China was severely battered in the first quarter with sharp contractions across all main sectors.
Growth for the larger Southeast Asian economies is forecast to drop to 1 percent in 2020 before nursing back to 4.7 percent next year.
Thailand, Southeast Asia’s manufacturing hub, may suffer a 4.8 percent negative growth this year, while Vietnam could post a relatively high 4.8 percent gain, said the bank.
Growth in Central Asia will slow to 2.8 percent this year with lower oil prices while the Pacific will contract by 0.3 percent with declining tourism, before rebounding in 2021.
South Asia’s growth rate is expected to slow from 5.1 percent in fiscal 2019 to 4.1 percent in fiscal 2020 and then make a recovery to 6 percent in 2021, largely in India, where the forecast is 4 percent before a projected 6.2 percent rebound.
Across Asia and the Pacific, the authorities have introduced stimulus packages to support economic activity, noted ADB.
ADB chief economist Yasuyuki Sawada said, “The evolution of the global pandemic—and thus the outlook for the global and regional economy—is highly uncertain. Growth could turn out lower, and the recovery slower, than we are currently forecasting.”
“For this reason, strong and coordinated efforts are needed to contain the COVID-19 pandemic and minimize its economic impact, especially on the most vulnerable,” he added.