Growth in India will remain subdued after the country suffered a sharp slowdown last year, from 6.1 per cent in fiscal 2019 to 5 per cent, as a credit crunch that originated in the non-banking financial sector severely hampered bank lending , the Manila-based lender said.
"We face extraordinarily challenging times. The outbreak of coronavirus (COVID-19) is disrupting people's lives and interrupting business and other economic activities around the world," said Masatsugu Asakawa, President of Asian Development Bank.
Noting that COVID-19 has not yet spread extensively in India, ADB said measures to contain the virus and a weaker global environment will whip up headwinds, offsetting support from corporate and personal income tax cuts as well as financial sector reforms which are meant to revive credit flows.
In its Asian Development Outlook (ADO) 2020 the lender said: Gross domestic product (GDP) growth in India is forecast to slow further to 4 per cent in FY21 before strengthening to 6.2 per cent in the next fiscal.
South Asia will face a milder slowdown, it stated.
Growth in South Asia will decelerate to 4.1 per cent in FY2021 and then recover to 6 per cent in FY2022, largely tracking the trend in the dominant Indian economy, according to ADB.
After a disappointing fiscal, growth in the Asia and Pacific region is expected to slow sharply to 2.2 per cent in FY2021 under the effects of the current health emergency and then rebound to 6.2 per cent in FY2022, ADB said.
Developing Asia will weaken tremendously due to the pandemic, considering the region's deep integration with the global economy through tourism, trade, and remittances, it said, adding that plummeting commodity prices are also placing a severe burden on some countries.
