Developing Asia's already-slowing growth is set to weaken sharply this year, hit by the fallout from the coronavirus pandemic before it bounces back strongly next year, the Asian Development Bank (ADB) said on Friday.
The Manila-based lender said its baseline forecast called for growth in developing Asia, a group of 45 economies that includes China and India, to slow to 2.2% in 2020 from a previous forecast of 5.2%, matching last year.
"This will be the lowest growth that developing Asia will have seen in 22 years, or since the Asian financial crisis," said Abdul Abiad, director of ADB's macroeconomic research division.
For 2021, the region is forecast to recover and grow 6.2%, the ADB said in its Asian Development Outlook report.
It substantially cut its growth estimate for China, where the virus surfaced in December, to 2.3% this year from 5.8% previously, citing dismal economic activity in the first two months of the year.
But growth in the world's second largest economy is expected to rebound strongly to 7.3% in 2021, the ADB said.
After an initial outbreak brought China to a virtual halt last month, an ever-growing number of countries and territories have reported a spike in infections and deaths, causing entire regions to be placed on lockdown.
Measures to contain the highly contagious virus, which causes a respiratory illness called COVID-19, have hammered the global economy, leading economists to believe the world is heading towards a deep recession.
"This is a public health crisis and that's what needs to be addressed first, before the situation normalises," Abiad told Reuters. But in containing the pandemic, he added, governments must ensure "the most vulnerable are not left behind".
Given the rapidly changing situation, the ADB raised its estimate of the global cost of the "worst pandemic in a century" to $2.0 trillion to $4.1 trillion, for a drop of 2.3% to 4.8% in world gross domestic product (GDP). Last month, it estimated economic losses to reach between $77 billion to $347 billion.
Growth in south Asia's largest economy, India, is forecast to remain subdued after a sharp slowdown in 2019, with expansion for fiscal year 2020 seen slowing further to 4.0%, before strengthening to 6.2% in fiscal 2021, the ADB said.
Southeast Asia's growth this year is expected to track the weakness in major trading partner China and slow to 1.0% from 4.4% last year, but regain momentum and finish next year with growth of 4.7%.
The ADB slightly raised its inflation forecast for developing Asia to 3.2% from 3.1% previously, but declining food prices in the latter part of the year should lead to a slower inflation rate of 2.3% next year.