TOKYO, 4 February 2021 – The growth slowdown in Emerging Asia is significant and recovery will face challenges through 2021, the 蜂鸟电竞在线入口 Development Centre reports in its latest Economic Outlook for Southeast Asia, China and India 2021: Reallocating resources for digitalisation released today.
Real GDP in Emerging Asian countries – ASEAN-10, China and India – is projected to decline by 1.7% on average in 2020 before rebounding by 7.4% in 2021, from a low base. In ASEAN, average real GDP is projected to contract by 3.4% in 2020, and grow by 5.1% in 2021, according to the report
The economic fallout in 2020 is especially pronounced in India (-9.9%) and the Philippines (-9.0%). At the other extreme, Viet Nam will post the strongest output growth rate in the region in 2020, forecast at 2.6%.
The anticipated near-term rebound stems from improvements in financial conditions as well as from the significant monetary and fiscal policy measures put in place by governments. Yet a number of factors are expected to restrain demand and investment. In particular, labour-market conditions will remain weak, while the contribution of the external sector to the recovery is jeopardised by an uncertain global economic situation. Public and private debt levels are also expected to rise. Moreover, if the quality of assets in the banking sector deteriorates, banks may not be able to provide sufficient support to the recovery. Finally, inflationary pressures should remain low due to the ongoing slack in the economy.
Each country’s pandemic management strategies and their ability to maintain policy support will shape the 2021 recovery. Countries with superior pandemic management, including the distribution of COVID-19 vaccines, will fare better. When concerns
about the virus recede, continued policy support to households and businesses will facilitate a faster rebound. With narrowing monetary and fiscal room of manoeuvre, policy makers in Emerging Asia will need to devote their attention to improving monetary policy transmission and increasing fiscal policy effectiveness.
The COVID-19 pandemic has intensified the importance of digital health and digital education. In both areas, policy makers need to overcome the existing infrastructure, regulatory and human capital barriers. In digital health, clear regulations are necessary to ensure quality health care and strong compliance with rules on data protection. Health care professionals must be trained in digital tools to encourage the broader adoption of digital health. In digital education, the focus should be on strengthening teachers’ digital skills and maintaining quality education in remote settings. With the pandemic disrupting various sectors of the economy, technical and vocational education and training (TVET) can play an important role in the upskilling and reskilling of workers. Furthermore, the benefits of digital health and digital education need to be distributed equitably through equal access to reliable, affordable and easy-to-use equipment.
Finally, the pandemic has accelerated the Fourth Industrial Revolution. Industry 4.0 technologies have allowed firms to stay responsive to market needs. Several countries in Emerging Asia have taken decisive steps to support digitalisation during the pandemic, most commonly by providing incentives for firms to encourage e-commerce and the digitalisation of operations and trade channels. Varying levels of readiness and differing economic structures influence countries’ capacities to adopt Industry 4.0 technologies. The most frequently cited bottlenecks include lack of adequate infrastructure and awareness, as well as financial limitations, notably for smaller firms. Greater co-operation is necessary to respond to increasingly sophisticated cyber threats and to strengthen cyber resilience in Emerging Asia.
The report benefitted from the support of the governments of Japan, Korea and Switzerland, and the European Union.
For further information on the 2021 edition of the Economic Outlook for Southeast Asia, China and India , click here .
Journalists are invited to contact Kensuke Tanaka, Head of Asia Desk, 蜂鸟电竞在线入口 Development Centre ( Kensuke.Tanaka@oecd.org , +33 6 27 19 05 19), or Bochra Kriout at the 蜂鸟电竞在线入口 Development Centre’s Press Office ( Bochra.Kriout@oecd.org , +33 1 45 24 82 96) and Yumiko Yokokawa, Media and Publication Manager at the 蜂鸟电竞在线入口 Tokyo Centre ( Yumiko.Yokokawa@oecd.org , +81 3 55 32 00 21).