The ADB’s Asian Development Outlook report on Wednesday projected the country’s GDP growth to accelerate 6.8% in FY2021 with stimulus package implementation and recovery in global growth and world trade.
In an update later, Country Director Manmohan Parkash said: “The economy was showing signs of recovery with higher remittances, exports and other indicators, but the recent surge in pandemic and the lockdowns are likely to trim our GDP growth projection of 6.8% for fiscal year 2020-2021 by at least one percentage point.”
“The government managed the first wave of COVID-19 in 2020 well as the stimulus measures and economic policies have largely been effective.”
“The ongoing pandemic is an opportunity to undertake further reforms in social protection and health sector, improving competitiveness of the private sector, reducing cost of doing business, diversifying exports, and developing skills,” Parkash said.
Future economic growth will depend on recovery in domestic economic activities fueled mainly by implementation of stimulus packages, strong inflow of remittances, and rebound in global trade amid projected growth in major export destinations, according to the ADB.
By the region, South Asia will record the fastest economic recovery this year, with the ADB predicting an expansion of 9.5% after a 6% contraction in 2020, buoyed by India's economic revival.
Even as the coronavirus crisis in India remained grim, ADB's 11% growth forecast for the South Asian country this year, which follows an 8% slump in 2020, is "achievable at this stage", according to ADB chief economist Yasuyuki Sawada.
"India's vaccine rollout is going well," Sawada said putting it on course to vaccinate 300 million by August and achieve herd immunity by 2022. India leads the world in the daily average number of new infections reported, accounting for one in every 3 infections reported worldwide each day, according to a Reuters tally.
Developing Asia's economic rebound this year could be stronger than previously thought, the ADB said, underpinned by expectations of solid global recovery and progress on vaccines. But the Manila-based lender was quick to caution that risks to its forecasts were skewed more to the downside because new outbreaks and delays in vaccine rollout could prolong disruptions to mobility and stall regional economic activity.
Developing Asia, which groups 45 countries in the Asia-Pacific, is forecast to grow 7.3% in 2021, the ADB said, stronger than its previous estimate of 6.8% and follows a 0.2% contraction last year. For 2022, the region is projected to grow 5.3%.
"Growth is gaining momentum across developing Asia, but renewed COVID-19 outbreaks show the pandemic is still a threat," said Sawada.
Geopolitical tensions, political turmoil, production bottlenecks, financial turmoil and long-term scarring effects of learning losses from school closures due to the pandemic also threaten recovery, Sawada said in a separate briefing.
Asia accounts for more than 16% of the global caseload of 147.9 million coronavirus infections, according to a Reuters tally. With more than 319,000 deaths, the region accounts for 9.8% of the global COVID-19 toll. As some economies continue to struggle to contain the virus and its new variants, the ADB said the recovery would be uneven.
China's economic rebound from a pandemic-induced slump is forecast to be the strongest this year, with growth seen at 8.1%, driven by strong domestic demand and exports, before moderating to 5.5% in 2022, the ADB said.
[With details from Reuters]