India's economy to contract by 9% in FY21: ADB

India's economy to contract by 9% in FY21: ADB

"India imposed strict lockdown measures to contain the spread of the pandemic and this has had a severe impact on economic activity", said ADB Chief Economist Yasuyuki Sawada.

The developing Asian region is expected to see its first economic contraction this year since the 1960s, the ADB said.

"The downturn is across the board, with nearly three-fourths of regional economies projected to contract - the largest such share in the past six decades", the bank said in the latest update to its outlook.

Earlier this month, the state-run Korea Development Institute cut the nation's economic growth outlook to a contraction of 1.1 percent this year, a sharp downward revision of 0.2 percent expansion in its May forecast.

While the vast region is expected to bounce back next year, with gross domestic product (GDP) projected to grow 6.8 percent, it will be "substantially smaller" than forecast before COVID-19 struck.

Coronavirus-ravaged economies across the Asia Pacific will make a "swoosh-shaped" recovery next year, the Asian Development Bank forecast Tuesday, but it warned that further restrictions to combat the contagion could derail the region's return to growth. Growth is forecast to accelerate to 7.7% in 2021, up from a previous forecast of 7.4%.

"Most economies in the Asia and Pacific region can expect hard growth path for the rest of 2020", ADB Chief Economist Yasuyuki Sawada said in a statement.

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The economy is expected to rebound in 2021 as the outbreak is contained, the economy is further opened, and more government stimulus measures are implemented. To mitigate the risk, governments in the region have delivered wide-ranging policy responses including policy support packages - mainly income support - amounting to 3.6 trillion dollars or equivalent to about 15 per cent of regional GDP.

Developed countries such as Japan and Australia are excluded.

While the pandemic remains the biggest downside risk to the region's outlook, Sawada said in a separate media briefing "worsening geopolitical tensions" that include the trade and tech war between US and Beijing, could also dent growth. The world's second largest economy is expected to rebound strongly to 7.7% in 2021, the ADB said.

The ADB says developing Asia's economy will shrink by 0.7% in 2020. Some economies heavily reliant on trade and tourism, particularly in the Pacific and South Asia, face double-digit contractions this year.

The downturn is broad-based-three-fourths of the region's economies are expected to contract this year with the People's Republic of China (PRC) being an important exception.

The inflation forecast for developing Asia is revised downwards to 2.9 per cent this year from 3.2 per cent forecast in April due to continued low oil prices and weak demand.

Bangladesh will grow 5.2 percent, Bhutan 2.3 percent and Nepal 2.3 percent.

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