The COVID-19-battered economy of developing Asia is to shrink for the first time since the early 1960s, with the level of output next year expected to remain below pre-pandemic projections even as growth recovers, a report released yesterday by the Asian Development Bank (ADB) said.
The region’s GDP this year is to fall 0.7 percent, down from June’s projection of an increase of 0.1 percent, the bank said.
A contraction this year would be the first since 1962, ADB chief economist Yasuyuki Sawada said in a live-streamed briefing.
“The economic threat posed by the COVID-19 pandemic remains potent, as extended first waves or recurring outbreaks could prompt further containment measures,” Sawada said.
Downturns across developing Asia are more widespread than previous crises, with three-quarters of economies in the region tipped to shrink this year, he said.
China is to buck the trend and is forecast to expand 1.8 percent this year — unchanged from June’s projection — as successful public health measures provide a springboard for growth, the ADB said.
Growth next year is forecast to accelerate to 7.7 percent, up from a previous forecast of 7.4 percent.
In India, where lockdowns have stalled private spending, GDP this year is to shrink by 9 percent, sharply down from June’s forecast of minus-4 percent, the ADB said.
There were also big downgrades for the Philippines and Thailand, which are now projected to contract 7.3 percent and 8 percent respectively.
The downgrades took into account that the pandemic has been “more serious” than initially anticipated, Sawada said in an interview with Bloomberg TV yesterday. “Having said that, our baseline assumption is that health risks will be basically contained within this year.”
“Large-scale” fiscal stimulus has helped cushion the blow and provides a base for a rebound, Sawada said.
Regional governments have promised US$3.6 trillion, equivalent to about 15 percent of regional economic activity, in subsidies, loans and other support for individuals and businesses, but small companies that account for most business in the region are short of capital to weather the crisis, the ADB said.
Next year, growth in developing Asia — a region that excludes advanced nations like Japan, Australia and New Zealand — is to rebound to 6.8 percent, in part because it will be measured against a weak this year, Sawada said.
ADB expects a recovery to be L-shaped or swoosh-shaped, rather than V-shaped, which would leave next year’s GDP level below pre-coronavirus projections, implying that the recovery is only “partial” and “not full,” it said.
Virus containment “seems to be translated into growth performance,” and a prolonged pandemic remains the biggest downside risk this year and the next, he said.
US-China trade tensions and technology conflicts, as well as financial vulnerabilities amid the pandemic, weigh on growth, Sawada said.
Policies focused on protecting lives and livelihoods, and ensuring a safe return to work and restart of businesses, are crucial to ensuring a sustained recovery for the region, he said.
Additional reporting by AP
RECORD BUDGET: TSMC does plan to raise its proposed capital expenditure a lot, and could benefit if Intel outsources more of its production to foundries, analysts said Intel Corp’s earnings conference call on Thursday is expected to clarify the US semiconductor giant’s outsourcing production plans, which would be crucial regarding Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) performance, analysts said. “TSMC stands to benefit if Intel outsources more of its fabrication to foundries,” SinoPac Securities Investment Service Corp (永豐投顧) analysts said in a note on Friday. Yuanta Securities Investment Consulting Co (元大投顧) was more cautious, saying that Intel’s contribution initially would be limited, but its outsourcing plans would still highlight TSMC’s leadership in technology, it added. “Intel will continue to manufacture server or high-end central processing units [CPUs], which have higher
MOBILE SMART: The Dimensity 1200 is 22 percent better in terms of performance than its predecessor, and 25 percent more power-efficient, the handset chip designer said MediaTek Inc (聯發科) yesterday unveiled its premium 5G processors — the Dimensity 1200 and Dimensity 1100 — as it vies for a larger slice of the world’s rapidly growing 5G smartphone market. Manufactured using Taiwan Semiconductor Manufacturing Co’s (台積電) 6-nanometer process technology, the Dimensity 1200 processor performs 22 percent better than the previous generation Dimensity 1000+ processor, and is 25 percent more power-efficient, MediaTek said. Chinese smartphone brands Xiaomi Corp (小米) and Realme Mobile Telecommunications (Shenzhen) Co (銳爾覓移動通信) are to be the first adopters of the latest Dimensity chips, the companies said during a virtual media briefing. Xiaomi plans to equip its first
Norway’s oil and gas reserves have made it one of the world’s wealthiest countries, but its dreams for deep-sea discovery now center on something different. This time, Oslo is looking for a leading role in mining copper, zinc and other metals found on the seabed and in hot demand in green technologies. The country could license companies for deep-sea mining as early as 2023, the Norwegian Ministry of Petroleum and Energy said, potentially placing it among the first countries to harvest seabed metals for electric vehicle batteries, wind turbines and solar farms. However, that could also place it on the front line of
‘BROAD RANGE’: The US Department of Commerce intends to deny a significant number of license requests for exports to Huawei, an industry association said US President Donald Trump’s administration notified Huawei Technologies Co (華為) suppliers, including chipmaker Intel Corp, that it is revoking certain licenses to sell to the Chinese company and intends to reject dozens of other applications to supply the telecommunications firm, people familiar with the matter told reporters. The action — likely the last against Huawei under Trump — is the latest in a long-running effort to weaken the world’s largest telecommunications equipment maker, which Washington sees as a national security threat. The notices came amid a flurry of US efforts against China in the final days of Trump’s administration. US president-elect Joe