The coronavirus pandemic has tipped Asia’s economies into recession for the first time in nearly six decades, though the recession is likely to be short lived, according to the Asian Development Bank (ADB).
The ADB is expecting Asian economies to contract by 0.7% this year but it believes recovery will begin next year and the region will rapidly emerge from the slowdown.
The Asian Development Outlook 2020 Update forecast growth to rise to 6.8% in 2021 after roughly three quarters of the region’s economies have fallen into recession, with some exceptions including China.
However the main reason for such an eye-catching growth prediction is that figure will stand in comparison to a weak 2020 – next year’s economic figures will be lower than those predicted before the pandemic struck.
This means that instead of the much-discussed “V-shaped” recovery, the region will see a so-called “L-shaped” recovery.
“Most economies in the Asia and Pacific region can expect a difficult growth path for the rest of 2020,” said Yasuyuki Sawada, chief economist at the ADB.
“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 consistent and coordinated steps to address the pandemic and policies which focus on protecting lives and livelihoods of vulnerable people would be vital to ensuring an “inclusive and sustainable” recovery.
So far regional governments have created stimulus packages worth a total of $3.6tn, equivalent to about 15% of regional GDP.
The pandemic and geopolitical tensions, including an escalation of the trade and technology war between the US and China, are potential risk factors.
The ADB noted China was bucking the trend and is expected to maintain growth this year of 1.8%, which will increase to 7.7% in 2021.
In India, where widespread lockdowns have stunted the economy, GDP is expected to shrink by nearly 9% in 2020 before recovering by 8% in 2021.
Meanwhile, as Thailand looks to recover from the effects of the pandemic it is considering the construction of two deep sea ports on each side of its Southern isthmus to be connected by road and rail, Bloomberg has reported.
Such a move would be likely to shorten sea journeys between East Asia and the Bay of Bengal by two or three days.
Thailand’s transport minister Saksiam Chidchob said the port and railway solution would be cheaper and cause less environmental damage than a previously proposed 400 meter-wide canal.
The Thai government has frequently proposed and then delayed building a hundred-kilometer canal between the Gulf of Thailand and the Andaman Sea – an idea which has been strongly backed by China.
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