New Delhi: Growth in India for fiscal year 2020 would be minus 8.0 per cent, up from minus 9.0 per cent projected in September, as the economy reopens from the pandemic-induced lockdown and vaccines become available, the Asian Development Bank said on Thursday.
The multilateral lender kept the outlook for South Asia’s largest economy for fiscal year 2021 at 8.0 per cent.
According to a report released by the bank, South Asia’s GDP is forecast to contract by 6.1 per cent in 2020, revised up from the 6.8 per cent contraction expected in September.
Growth in the region is forecast to rebound to 7.2 per cent in 2021.
Economic activity in developing Asia is forecast to contract by 0.4 per cent this year, before picking up to 6.8 per cent in 2021 as the region moves toward recovery from the effects of the COVID-19 pandemic.
The new growth forecast, presented in a regular supplement to the Asian Development Outlook 2020 Update, is an improvement from the -0.7 per cent gross domestic product (GDP) growth forecast in September, while the outlook for 2021 remains unchanged.
But prospects are diverging within the region, with East Asia set to grow this year while other subregions are contracting.
“The outlook for developing Asia is showing improvement. Growth projections have been upgraded for the People’s Republic of China (PRC) and India, the region’s two largest economies,” said ADB Chief Economist Yasuyuki Sawada.
“A prolonged pandemic remains the primary risk, but recent developments on the vaccine front are tempering this.
Safe, effective, and timely vaccine delivery in developing economies will be critical to support the reopening of economies and the recovery of growth in the region.”
Pandemic-induced lockdowns and restrictions have been eased in varying levels in the region, with merchandise exports rebounding quickly from substantial declines in the second quarter. Mobility is also returning to pre-COVID-19 levels in East Asia and the Pacific, where the spread of COVID-19 has largely been contained or prevented in recent months.
A recovery in tourism, however, is likely to be delayed.
Most of developing Asia’s subregions are forecast to contract this year. East Asia is the exception, with an upgraded growth forecast of 1.6% for 2020 on the back of faster than expected recoveries in the PRC and Taipei,China. East Asia’s growth outlook for 2021 is maintained at 7.0%.
Economic growth in Southeast Asia remains under pressure as COVID-19 outbreaks and containment measures continue, particularly in Indonesia, Malaysia, and the Philippines.
The region’s growth forecast for 2020 is revised down to minus 4.4 per cent from minus 3.8 per cent in September. The region’s outlook for 2021 is also downgraded, with Southeast Asia now expected to grow 5.2 per cent next year compared to the 5.5 per cent growth forecast in September.
Regional inflation is expected to marginally ease to 2.8 per cent in 2020, from the 2.9 per cent projected in September, due to depressed demand and low oil prices.
Inflation for 2021 is forecast at 1.9 per cent, down from 2.3 per cent forecast in September. Oil prices are retained at $42.50 per barrel in 2020 before increasing to $50.00 per barrel in 2021.