ADB revises GDP and inflation estimates for developing Asian countries
Developing Asia is set to see its first regional gross domestic product (GDP) contraction in 60 years, according to the Asian Development Bank (ADB), which expects further economic disruption due to the COVID-19 pandemic.
In its latest report, the ADB projects a GDP contraction of 0.7 per cent for the Asian region in 2020. However, it expects this value to rebound to 6.8 per cent in 2021 – but this is still far below pre-COVID projections.
The ADB thus expects regional recovery to be L-shaped or ‘swoosh-shaped’ rather than V-shaped.
Growth estimates for countries in the region
For Sri Lanka, the ADB estimates a negative GDP growth of -5.5 per cent in 2020 – which is better than its previous projections – while it expects a GDP growth of 4.1 per cent next year (2021).
It also estimates a higher inflation rate of 4.5 per cent for Sri Lanka in 2020, compared to its previous estimate of 4.0 per cent.
The increased inflation estimate for 2020, which applies to several countries in the region, is due to expected supply-side disruption and currency depreciation.
However, the ADB did not revise its inflation forecast for the region in 2021. Similarly, its 2021 inflation forecast for Sri Lanka remains unchanged, at 4.2 per cent.
"The threat of a prolonged COVID-19 pandemic and a return to more stringent containment measures is the main risk to the outlook," the ADB added.