Economic activity in Bangladesh has recovered more strongly than expected with both exports and remittances growing in recent months amid the Covid-19 pandemic, said a new report of Asian Development Bank (ADB).
But the country still has external risks to face as Covid-19 outbreaks renew in major export destinations, according to the new growth forecast, presented in a regular supplement to the Asian Development Outlook (ADO) 2020 Update.
The report forecasts that economic activity in developing Asia will grow by 6.8 percent in 2021 as the region is moving towards recovery from the effects of the Covid-19 pandemic.
It also said that economy in this region would contract by 0.4 percent in 2020 before getting momentum in the next year.
The new growth forecast is an improvement from the -0.7% gross domestic product (GDP) growth forecast in September, while the outlook for 2021 remains unchanged. But prospects are diverging within the region, with East Asia set to grow this year while other subregions are contracting, said the report.
"Most of developing Asia's subregions are forecast to contract this year. East Asia is the exception, with an upgraded growth forecast of 1.6 percent for 2020 on the back of faster than expected recoveries in the PRC and Taipei, China. East Asia's growth outlook for 2021 is maintained at 7.0 percent."
According to ADB, South Asia's GDP is forecast to contract by 6.1 percent in 2020, revised up from the 6.8 percent contraction expected in September. Growth in South Asia is forecast to rebound to 7.2 percent in 2021.
"The growth forecast for India, the subregion's largest economy, for fiscal year (FY) 2020 is raised to -8.0 percent, from the -9.0 percent projection in September, while outlook for FY2021 is kept at 8.0 percent."
Economic growth in Southeast Asia remains under pressure as Covid-19 outbreaks and containment measures continue, particularly in Indonesia, Malaysia, and the Philippines. The subregion's growth forecast for 2020 is revised down to -4.4 percent from -3.8 percent in September, the report reads.
The subregion's outlook for 2021 is also downgraded, with Southeast Asia now expected to grow 5.2 percent next year compared to the 5.5 percent growth forecast in September.
"The outlook for developing Asia is showing improvement. Growth projections have been upgraded for the People's Republic of China (PRC) and India, the region's two largest economies," said ADB Chief Economist Yasuyuki Sawada.
"A prolonged pandemic remains the primary risk, but recent developments on the vaccine front are tempering this. Safe, effective, and timely vaccine delivery in developing economies will be critical to support the reopening of economies and the recovery of growth in the region," he added.