Asian Tigers’ GDP to Fall in 2020, First Time in 60 Years

For the first time in sixty years, the Gross Domestic Product (GDP) of Asia’s developing economies, including the Asian Tigers, will contract amid sustained efforts to arrest the impact of the coronavirus.

Asia, the hotbed of a novel virus that has disrupted the global economy, will see its developing economies record negative growth.

Countries of note in Asia include China, India, Indonesia, as well as the Asian Tigers—Hong Kong, Singapore, South Korea and Taiwan—which once fascinated the economic world.

Since the first quarter of the year, countries of the world have had to put lockdown measures in place as part of strategies to curtail the spread of the coronavirus.

These measures have not only resulted in depressed demand and low oil prices, they have shattered economic and developmental plans for many countries of the world.

Since the coronavirus pandemic broke out, governments across Asia have spent $3.6tn on policy measures in response to the pandemic, equivalent to 15 per cent of regional GDP, and primarily in the form of income support.

But a new report by the Asian Development Bank (ADB) said Asia’s developing economies would record a negative GDP growth of 0.7 per cent this year.

The ADB said that depressed demand and low oil prices would help keep regional inflation low at 2.9 per cent this year, and trim it to 2.3 per cent in 2021, but there will be contraction.

“This will be the first regional contraction since the early 1960s,” Yasuyuki Sawada, ADB’s chief economist said ahead of the report’s launch.

Sawada said that the fall would be the sharpest since 1961, when regional growth contracted by 8 per cent.

The development bank said that the economies would rebound in 2021, growing on average by 6.8 per cent. However, it noted, this would still be below its pre-Covid-19 projections.

It said a prolonged pandemic that would require renewed lockdowns could “derail the recovery”, and was the biggest risk to the region’s growth this year and in 2021.

“Protracted weakness could trigger crises in some economies,” he said.

China

China, the source of the virus, is expected to record a growth.

The Asian country, where the virus was first detected in the central city of Wuhan, is expected to grow by 1.8 per cent this year and 7.7 per cent in 2021.

On Tuesday, China said it has tested around 1.78 million citizens in Hong Kong.
The mass testing conducted by health workers from mainland China commenced on Sept. 1 amid a rise in local infections in the semi-autonomous region. With a population of over 7.4 million, Hong Kong has reported 4,971 confirmed cases and 101 deaths so far.

China’s economic recovery accelerated in August, with retail sales returning to pre-coronavirus levels by showing their first month of growth this year.

Other major indicators like factory production, investment and property activity all gathered pace, according to China’s state-run statistics bureau.

The development signals a robust rebound, as the urban surveyed unemployment rate also edged down.

Analysts say successful public health measures would provide a platform for growth for the world’s second-largest economy.

India

Unlike China, where infection levels appear to be under control, India is now the epicenter of coronavirus pandemic in Asia.

With more than 4.8 million reported cases, the country has the highest number of coronavirus cases after the US and lockdown measures have depressed economic output.

Between April and June, India recorded a deep GDP contraction.

ADB said that India’s economy was expected to grow by 8 per cent in 2021.

Others

Earlier in June, the ADB tipped developing Asian countries to grow by an average of 0.1 per cent this year, before rebounding to 6.2 per cent growth in 2021.

Southeast Asia was previously expected to grow 1% for the year, but is now predicted to contract 3.8%.

Thailand, the Philippines and Singapore each set to experience declines of more than 6%, the ADB said.

Among Southeast Asian countries, the Philippines and Indonesia have reported the most number of infections.

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