Asia was the winner of the global economy in 2020 because of the success of its strategy to prevent the New Guinea virus outbreak; while Europe and the United States were in deep recession, many Asian economies experienced only a small contraction or even continued to grow.
However, Western economies have now started to rebound and are expected to return to pre-epidemic levels by the end of this year, but some Asian countries are paralyzed by the resurgence of the epidemic and growth is expected to slow in the coming months.
The latest economic outlook published by the Asian Development Bank points out that the performance of Asian economies will be highly divergent, and the resurgence of the pneumonia epidemic is one of the major risks.
Yasuyuki Sawada, chief economist at ADB, said, “New outbreaks continue, partly caused by mutated viruses, and many Asian economies are facing challenges in vaccine procurement and management.
ADB predicts that in 2021, Asian developing economies will grow by an average of 5.6%; China will grow by 8.1% and India by 11%; however, due to the unresolved threat of the epidemic, the growth forecast is revised downward.
Six months or eight months ago, I said Asia would lead because it could control the epidemic,” said Moody’s Analytics chief Asia Pacific economist Nannie Ko. But now the situation has changed, there is a serious epidemic in India, and the epidemic in India, the Philippines and Thailand is still high, the tourism industry will not be able to unblock. Japan and other countries, although the epidemic is milder, but also must control the economic activities of some regions.
The U.S. economic growth rate is estimated to be over 6% this year, which is supposed to be very favorable to Asian exporters. However, because the United States has imported a large number of products during the epidemic; and after the unsealing of the U.S. economy, adding demand mainly in the service sector, rather than products such as televisions, is not favorable to Asian exporters.
At the same time, due to the rise in U.S. interest rates, as well as the dollar exchange rate back up, will make the Asian financial situation tight, are unfavorable to Asian economic growth, some Asian countries may even repeat the 2013 “exit storm” of the tragic scene. HSBC Asian economic research director Fan Limin said, “the strong dollar is no longer the gospel of Asia; although beneficial to Asian exports, but the financial situation is tight.
But ADB pointed out that, because most of the emerging economies in Asia inflation is still low, so the financial situation triggered by the United States shock “is still manageable”; if the financial shock really happened, Sri Lanka and Laos will be quite vulnerable.
Fan Limin said, Taiwan and South Korea and other economies thanks to the semiconductor cycle, the situation in the next few years is still good; “in view of the shortage of semiconductor supply, the electronic industry boom will not be interrupted in the next two or three quarters, will enable Taiwan and South Korea to safely survive the wave”.
But other countries that rely on domestic demand is not, the biggest uncertainty lies in China; China’s economic data in the first quarter shows that it has lost some momentum. China’s domestic demand still needs to be expanded,” said Koznanny. The current estimate is that China’s economy will grow by 8% in 2021, but this will depend on the approach of the policy-making authorities and how quickly the government resumes its economic stimulus measures”.
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