Asian GDP growth to slump on coronavirus outbreak: ADB

Economic growth in Asia-Pacific will slow sharply this year because of the coronavirus pandemic, with the region's developing economies and commodity exporters particularly hard hit, the Asian Development Bank (ADB) said.

The ADB expects regional growth to slow to 2.2pc in 2020 from 5.2pc in 2019. Its previous forecast was for 5.5pc growth this year. Growth will rebound to 6.2pc in 2021, but only if the outbreak ends and activity normalises, it said.

Developing Asia — excluding the industrialised economies of Hong Kong, South Korea, Singapore and Taiwan — faces a sharper slowdown, with growth dropping to 2.4pc this year from 5.7pc in 2019.

China's economic growth is forecast to slow to 2.3pc this year from 6.1pc in 2019, and then rebound to 7.3pc in 2021. India's slowdown will be less pronounced, with growth slipping to 4pc in the April 2020 to March 2021 financial year from 5pc a year earlier.

But regional growth could be lower and the recovery slower than the bank is currently forecasting, given uncertainty over the evolution of the global pandemic.

Commodity and oil exporters, notably in central Asia, will be hit by a collapse in commodity prices as growth stagnates or contracts in the US, EU and Japan. The ADB expects Brent crude to average $35/bl this year and $55/bl in 2021, down from $65/bl in 2019. Front-month Brent futures closed at just under $30/bl yesterday.

The global cost of the pandemic could range from $2 trillion to $4.1 trillion, equivalent to a loss of 2.3-4.8pc of global GDP. The ADB based most of its projections on information available as of 20 March.

Japan and the US are the largest shareholders in the Philippines-based ADB, which lends to social and economic projects in the region. Its forecasts cover the region from central Asia to the Pacific islands.

The bank is the latest international institution to offer a gloomy forecast on the economic impact of the coronavirus pandemic, after the World Bank warned earlier this week that emerging Asia-Pacific economies could contract this year if the outbreak is prolonged.

The IMF will provide new forecasts in the next update of the World Economic Outlook later this month.

By Kevin Foster