Developing Asia’s Economies to Rebound in 2021 Amid Diverging Recovery Paths
Video | 28 April 2021
- Developing Asia’s economies are expected to rebound this year, growing 7.3% as COVID-19 vaccines are rolled out and as global demand recovers, before moderating to 5.3% in 2022.
- A sustained COVID-19 pandemic may result in long-term scarring, including prolonged unemployment and business closures, insufficient investment, and the effects of school closures.
- COVID-19 has severely disrupted education, with school closures lasting more than a year in some economies. This will lead to significant future earning losses for Asia’s students, estimated at up to $1.25 trillion, or equivalent to 5.4% of the region’s GDP in 2020.
Economic growth in developing Asia is set to rebound in 2021, supported by a healthy global recovery and progress on COVID-19 vaccines, according to ADB’s flagship economic publication, Asian Development Outlook (ADO) 2021. But recovery patterns in the region will not be uniform, with strong growth in East Asia and South Asia and moderate expansion in Southeast Asia, Central Asia, and the Pacific.
What will developing Asia's recovery look like this year and next?
The region's growth is projected to rebound to 7.3% this year and 5.3% in 2022, as COVID-19 is brought under control, vaccines are rolled out, and global demand recovers.
Recovery patterns won't be uniform across the region, however. Growth will be strongest this year in East Asia and South Asia, driven by the region's two giants, the People's Republic of China and India. In contrast, growth will be more moderate this year in Southeast Asia, Central Asia, and the Pacific.
Some countries are challenged by domestic outbreaks and weak tourism.
What risks could undermine the region's recovery?
The biggest risk to recovery is still the pandemic. New outbreaks continue, in part due to new variants. And many Asian economies face challenges in procuring and administering vaccines.
Other risks include tensions between the US and the PRC, production bottlenecks that could raise prices, and rising US interest rates that could tighten financial conditions.
Lastly, we worry about long-term scarring from the pandemic. This can result from prolonged unemployment and business closures, insufficient investment, and long-term effects of school closures.
What are the long-term effects of school closures in Asia?
The pandemic has severely disrupted education. School closures have lasted more than a year in some economies.
Schools are using remote learning, but many students have limited access to computers and the internet. This is leading to significant learning losses—almost a third of a year's learning, on average, for Asia's students. This will reduce the future productivity and earnings of today's students.
The present value of their lifetime earning losses adds up to $1.25 trillion, or 5.4% of the region's GDP in 2020.