The COVID-19-battered economy of developing Asia is to shrink for the first time since the early 1960s, with the level of output next year expected to remain below pre-pandemic projections even as growth recovers, a report released yesterday by the Asian Development Bank (ADB) said.
The region’s GDP this year is to fall 0.7 percent, down from June’s projection of an increase of 0.1 percent, the bank said.
A contraction this year would be the first since 1962, ADB chief economist Yasuyuki Sawada said in a live-streamed briefing.
“The economic threat posed by the COVID-19 pandemic remains potent, as extended first waves or recurring outbreaks could prompt further containment measures,” Sawada said.
Downturns across developing Asia are more widespread than previous crises, with three-quarters of economies in the region tipped to shrink this year, he said.
China is to buck the trend and is forecast to expand 1.8 percent this year — unchanged from June’s projection — as successful public health measures provide a springboard for growth, the ADB said.
Growth next year is forecast to accelerate to 7.7 percent, up from a previous forecast of 7.4 percent.
In India, where lockdowns have stalled private spending, GDP this year is to shrink by 9 percent, sharply down from June’s forecast of minus-4 percent, the ADB said.
There were also big downgrades for the Philippines and Thailand, which are now projected to contract 7.3 percent and 8 percent respectively.
The downgrades took into account that the pandemic has been “more serious” than initially anticipated, Sawada said in an interview with Bloomberg TV yesterday. “Having said that, our baseline assumption is that health risks will be basically contained within this year.”
“Large-scale” fiscal stimulus has helped cushion the blow and provides a base for a rebound, Sawada said.
Regional governments have promised US$3.6 trillion, equivalent to about 15 percent of regional economic activity, in subsidies, loans and other support for individuals and businesses, but small companies that account for most business in the region are short of capital to weather the crisis, the ADB said.
Next year, growth in developing Asia — a region that excludes advanced nations like Japan, Australia and New Zealand — is to rebound to 6.8 percent, in part because it will be measured against a weak this year, Sawada said.
ADB expects a recovery to be L-shaped or swoosh-shaped, rather than V-shaped, which would leave next year’s GDP level below pre-coronavirus projections, implying that the recovery is only “partial” and “not full,” it said.
Virus containment “seems to be translated into growth performance,” and a prolonged pandemic remains the biggest downside risk this year and the next, he said.
US-China trade tensions and technology conflicts, as well as financial vulnerabilities amid the pandemic, weigh on growth, Sawada said.
Policies focused on protecting lives and livelihoods, and ensuring a safe return to work and restart of businesses, are crucial to ensuring a sustained recovery for the region, he said.
Additional reporting by AP
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last