Asian Development Bank projects India’s GDP at -9% in FY21

The Asian Development Bank (ADB) has estimated that the GDP of India is expected to contract by 9% in fiscal 2020-21 (FY21). This estimate is worse than ADB’s previous estimate of -4%.However, for the FY22 (2021-22), ADB expects India’s GDP at 8 per cent. ADB also expects the gross domestic product (GDP) growth for developing Asia at – 0.7 per cent in 2020, the first negative economic growth since 1962.

main characteristics

• The Asian Development Outlook (ADO) 2020 update projected a negative 0.7% GDP growth for developing Asia in the year 2020, marking its first negative economic growth since the early 1960s.
• This economic growth will increase to 6.8% in the year 2021, as it will be measured relative to a weak 2020, leaving the next year’s production at a level lower than the pre-Kovid-19 estimates.
• In the year 2020, about three-fourths of negative growth is expected in the economies of the region.
• According to ADB’s Chief Economist, Yasuyuki Sawada, a difficult period of growth can be expected in the remaining months of the year 2020 in most economies in Asia and the Pacific.
• Kovid – The economic threat from the 19 pandemic still remains as the prevention or further outbreak of the outbreak or repeat outbreak of this pandemic can be further enhanced.

Kovid-19’s Impact on Asia’s Economy according to ADB

• According to ADB, the long Kovid – 19 epidemic remains the biggest downside risk to the region’s growth in the year 2020 and 2021.
• Other downside risks posed by geopolitical tensions include increased technology and trade conflicts between China and the United States.
• China is also one of the few economies in the region that are facing recession. China is expected to provide a platform for successful public health measures with growth of 1.8% in the year 2020 and 7.7% in the year 2021.
• Except East Asia, all other sub-regions of developing Asia are expected to register negative growth. East Asia will grow by 1.3% in the year 2020 and it is strongly predicted to redevelop by 7% in the year 2021.
• Some economies that rely heavily on trade and tourism, particularly in South Asia, and the Pacific region may face double-digit declines in the year 2020.
• According to ADB forecasts, most developing Asian countries will make their economic recovery in the year 2021, except for some economies in the Pacific.
• The inflation forecast for developing Asian regions has been revised upwards from the 3.2% forecast announced in April 2020 to 2.9% by the end of the year 2020 due to increase in oil prices and weak demand. Inflation is expected to reach 2.3% for the year 2021.

Policies to reduce risk

• To reduce the risk caused by Kovid-19, governments in the region are offering broad policy responses, including policy support packages, equal to $ 3.6 trillion, or about 15% of regional GDP.
• To deal with this epidemic, to focus on the livelihoods of the most vulnerable and coordinate the policy priorities that protect lives, as well as to ensure safe return to work of such people and resume business activities Consistent steps will remain important to ensure inclusive and sustainable redevelopment of the region.

UPSC