New Delhi: The Indian economy will recover by 8 per cent in FY 2021 before shrinking 9 per cent in FY 2020, says the Asian Development Bank.
"In India, where lockdowns have stalled consumer and business spending, GDP contracted by a record 23.9% in the first quarter of its fiscal year (FY) aInd is forecast to shrink 9% in FY2020 before recovering by 8% in FY2021," says the bank.
China is one of the few economies in the region bucking the downturn, it says, adding that it is expected to grow by 1.8% this year and 7.7% in 2021, "with successful public health measures providing a platform for growth."
The ADB, in its latest report, says economies across developing Asia will contract this year for the first time in nearly six decades but recovery will resume next year, as the region starts to emerge from the economic devastation caused by the coronavirus disease (COVID-19) pandemic.
The bank's Development Outlook 2020 update forecasts -0.7% gross domestic product (GDP) growth for developing Asia this year-marking its first negative economic growth since the early 1960s.
Growth will rally to 6.8% in 2021, in part because growth will be measured relative to a weak 2020. This will still leave next year's output below pre-COVID-19 projections, suggesting an "L"-shaped rather than a "V"-shaped recovery. About three-quarters of the region's economies are expected to post negative growth in 2020.
"Most economies in the Asia and Pacific region can expect a difficult growth path for the rest of 2020," said ADB Chief Economist Yasuyuki Sawada. "The economic threat posed by the COVID-19 pandemic remains potent, as extended first waves or recurring outbreaks could prompt further containment measures.
Consistent and coordinated steps to address the pandemic, with policy priorities focusing on protecting lives and livelihoods of people who are already most vulnerable, and ensuring the safe return to work and restart of business activities, will continue to be crucial to ensure the region's eventual recovery is inclusive and sustainable."
A prolonged COVID-19 pandemic remains the biggest downside risk to the region's growth outlook this year and next year. To mitigate the risk, governments in the region have delivered wide-ranging policy responses, including policy support packages-mainly income support-amounting to $3.6 trillion, equivalent to about 15% of regional GDP.
Other downside risks arise from geopolitical tensions, including an escalation of the trade and technology conflict between the United States and the People's Republic of China (PRC), as well as financial vulnerabilities that could be exacerbated by a prolonged pandemic.
The bank has revised the inflation forecast for developing Asia downwards to 2.9 per cent this year from 3.2 per cent forecast in April, due to continued low oil prices and weak demand. Inflation for 2021 is expected to ease further to 2.3%. (UNI)