The Asian Development Bank (ADB) on Thursday raised growth forecast for India in current fiscal year to minus 8 per cent from minus 9 per cent projection in September while keeping the outlook for next fiscal year at 8 per cent.
At the same time, it said economic activity in developing Asia is forecast to contract by 0.4 per cent this year before picking up to 6.8 per cent in 2021 as the region moves toward recovery from the effects of coronavirus disease (COVID-19) pandemic.
The new growth forecasts presented in a regular supplement to the Asian Development Outlook (ADO) 2020 Update are an improvement from the minus 0.7 per cent 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 sub-regions are contracting. Developing Asia refers to the 46 developing members of ADB.
"The outlook for developing Asia is showing improvement. Growth projections have been upgraded for China 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."
Pandemic-induced lockdowns and restrictions have been eased in varying levels in the region with merchandise exports rebounding quickly from substantial declines in the second quarter.
Mobility is also returning to pre-COVID-19 levels in East Asia and the Pacific where its spread has largely been contained or prevented in recent months. A recovery in tourism, however, is likely to be delayed.
Most of developing Asia's sub-regions are forecast to contract this year. East Asia is the exception with an upgraded growth forecast of 1.6 per cent for 2020 on the back of faster than expected recoveries in China. East Asia's growth outlook for 2021 is maintained at 7 per cent.
South Asia's GDP is forecast to contract by 6.1 per cent in 2020, revised up from the 6.8 per cent contraction expected in September. Growth in South Asia is forecast to rebound to 7.2 per cent in 2021.
Economic growth in Southeast Asia remains under pressure as COVID-19 outbreaks and containment measures continue -- particularly in Indonesia, Malaysia and the Philippines.
The sub-region's growth forecast for 2020 is revised down to minus 4.4 per cent from minus 3.8 per cent in September. The sub-region's outlook for 2021 is also downgraded with Southeast Asia now expected to grow 5.2 per cent next year compared to the 5.5 per cent growth forecast in September.
The outlook for the Pacific is unchanged for both 2020 and 2021 at minus 6.1 per cent and 1.3 per cent respectively. Central Asia's growth forecast for 2020 remains at minus 2.1 per cent but outlook for 2021 is slightly downgraded to 3.8 per cent from the 3.9 per cent growth projection in September.
Regional inflation is expected to marginally ease to 2.8 per cent in 2020 from the 2.9 per cent projected in September due to depressed demand and low oil prices.
Inflation for 2021 is forecast at 1.9 per cent, down from 2.3 per cent forecast in September. Oil prices are retained at 42.50 dollars per barrel in 2020 before increasing to 50 dollars per barrel in 2021.