Asean+3 growth tipped to slow sharply to zero in 2020 before rebounding strongly to 6% in 2021: AMRO

AUGUST 06, 2020 - 12:50 PM

THE economic growth of Asean, China, Japan and South Korea is tipped to slow sharply to zero this year, down from 4.8 per cent last year. It is then expected to pick up strongly to 6 per cent in 2021, says an updated forecast by AMRO (the Asean+3 Macroeconomic Research Office).

The regional macroeconomic surveillance organisation said in a statement: "The Covid-19 pandemic continues to cast a long, dark - and uncertain - shadow over the outlook for growth, having wreaked havoc on the global economy since February 2020." 

The latest outlook for Asean+3, based on data as at Aug 5, is a far cry from AMRO's outlook in April, when it projected the region to grow 2.2 per cent in 2020 and 5.5 per cent in 2021. 

"We expect a gradual U-shaped recovery in the Asean+3 region, led by China," said Khor Hoe Ee, AMRO's chief economist. AMRO expects China to grow 2.3 per cent in 2020 and 7.0 per cent in 2021.

Dr Khor said nine of the 14 Asean+3 economies are likely to shrink this year. This includes Singapore, which is tipped to post negative growth of 6.0 per cent before bouncing back to 7.0 per cent growth next year.

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The economies expected to continue to grow in 2020 are China and the smaller Asean member states - Brunei (1.6 per cent), Laos (0.5 per cent), Myanmar (1.1 per cent) and Vietnam (3.1 per cent).

AMRO's growth forecasts are based on the assumption that both global and regional efforts are effective in containing the spread of the coronavirus. It said the resurgence in infections in some parts of the region and elsewhere have heightened caution about another spate of lockdowns, which the Asean+3 economies could ill afford.

"The biggest challenge facing Asean+3 policymakers in the second half of 2020 will be balancing the trade-off between easing restrictions to revive their economies and risking another wave of infections," said Ong Li Lian, AMRO's group head and lead specialist for financial surveillance. "Managing the exit from the raft of pandemic policies will be the key to regional financial stability."