WITH the Covid-19 outbreak, South-east Asia’s gross domestic product growth is expected to slow sharply to just 1 per cent in 2020, before rebounding to 4.7 per cent in 2021, according to an Asian Development Bank report on April 3. This is down from 2019’s full-year growth rate of 4.4 per cent.
The report, Asian Development Outlook 2020, forecasts that for developing Asia as a whole, growth will slow to 2.2 per cent in 2020, before rebounding to 6.2 per cent in 2021.
All Asean economies will see a growth slowdown because of Covid-19 and a consequent global slump, especially given their strong trade and investment ties with a slowing China, said the report.
Thailand is expected to perform the worst with a 4.8 per cent contraction, “continuing a steady slide in recent years”.
“Growth in the closely intertwined economies of Malaysia and Singapore will plummet nearly to zero in 2020, with only Malaysia enjoying a strong rebound next year,” said the report.
Cambodia and Indonesia will see sharp deceleration. So will the Philippines, despite its expansionary government policies, though the latter should facilitate an upturn in 2021.
One exception is Vietnam, where growth is forecast to “decelerate significantly but remain uniquely robust in the subregion”.
Inflation is South-east Asia is expected to stay tame at 1.9 per cent in 2020 and 2.2 per cent in 2021, with most economies weakening and global oil prices softening.
“Counting mitigated deflation in Brunei Darussalam, 8 of the 11 economies will see somewhat higher inflation this year because of continued food price pressure, but inflation will slow in Myanmar and the Philippines and reverse to a deflation in Thailand.”