AEIR 2021

  • Central Asia

    Armenia

    After surging by 7.6% in 2019, the economy contracted for the first time in 11 years in 2020, by 7.6%, due to the COVID-19 pandemic and cross-border political events. Industry, excluding construction, contracted by 1.5% as declines in manufacturing, electricity generation, and utilities for water and waste management outweighed a 12.0% rise in mining and quarrying. Services plunged by 9.2% reflecting double-digit declines in trade, recreation, accommodation, transportation, and food services. On the demand side, private consumption, which constitutes 80% of GDP, decreased by 14.0% as business closures and reduced income and remittances cut household spending. However, public consumption grew by 15.6% as the government provided stimulus to mitigate the COVID-19 impact and support economic activity. Average inflation eased from 1.4% in 2019 to 1.2% in 2020, reflecting weaker external and domestic demand.
    Source: Asian Development Outlook 2021.

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    Azerbaijan

    The economy contracted by 4.3% in 2020 due to the COVID-19 pandemic and lower oil production, reversing 2019 growth of 2.5%. On the supply side, industry fell by 5.6% as mining declined by 7.4%. Construction fell by 8.7% in 2020, worse than the 2.8% decline in 2019. Manufacturing grew by 10.4%. Agriculture slowed to 1.9% growth after rising by 7.3% in 2019. Inflation inched up to 2.8% from 2.6% in 2019. On the demand side, private consumption and investment fell while net exports plunged due to lower hydrocarbon exports. Fiscal stimulus widened the budget deficit to 2.4% of GDP from 0.3% in 2019. With most banks well-capitalized and inflation within its target band, monetary policy remained accommodative. As domestic and external demand improves and consumer confidence returns, the economy is expected to grow by 1.9% in 2021 and 2.5% in 2022.
    Source: Asian Development Outlook 2021.

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    Georgia

    Real GDP contracted by 6.2% in 2020, reversing the 5.0% growth in 2019, as measures to contain COVID-19 cut domestic demand, and steep declines in tourism and export receipts pummeled the external sector. Growth is forecast to return to 3.5% in 2021 with a gradual revival in domestic demand and private consumption. Economic growth should accelerate to 6.0% in 2022 with an expected recovery in tourism and the full reopening of the economy. Industry is forecast to expand by 7.6% in 2021 as continued fiscal stimulus supports construction and other sectors and as external demand rebounds. GDP is forecast to grow by 6.0% in 2022.
    Source: Asian Development Outlook 2021.

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    Kazakhstan

    The economy contracted by 2.6% in 2020, reversing its 4.5% growth in 2019. Measures to control the spread of COVID-19 severely affected services, while layoffs hampered private consumption. Public consumption grew by 13.8% in 2020 due to pandemic response stimulus. On the supply side, services contracted most, declining by 5.6% year-on-year due to losses in transportation and trade. Industry also fell, but by just 0.4%. However, the next 2 years should see the economy return to growth, with GDP forecast to grow by 3.2% in 2021 and 3.5% in 2022, provided the pandemic abates as vaccine rollouts accelerate.
    Source: Asian Development Outlook 2021.

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    Kyrgyz Republic

    Political turmoil compounded by the pandemic caused GDP to plunge by 8.6% in 2020, the worst since 1994. Industry slumped by 10.3%, reversing its 8.0% growth in 2019, as mining output fell by 22.4%, construction by 16.0% and manufacturing by 7.2%. Agriculture managed to grow by 1.1% in 2020. Both public and private consumption fell, while inflation jumped to 6.3% (from 1.1% in 2019) on rising food prices. The fiscal deficit expanded to 3.3% of GDP in 2020 from 0.1% of GDP in 2019. Imports fell by 26.2%, allowing a current account surplus of 4.5%. Remittances declined initially but recovered after the Russian Federation reopened its borders, eventually growing 2.0% in 2020. As Central Asia and the Russian Federation recover, the economy is forecast to return to 3.5% growth in 2021 and 5.0% in 2022.
    Source: Asian Development Outlook 2021.

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    Tajikistan

    Pandemic restrictions slowed economic growth to 4.5% in 2020 from 7.5% in 2019. Industrial growth slowed from 13.6% in 2019 to 9.7% in 2020, as mining contracted despite the expansion of manufacturing and electricity generation. Agriculture expanded by 8.8% while services fell by 2.6% and construction contracted by 4.6%. On the demand side, ongoing infrastructure spending and development support helped maintain consumption in 2020, although investment declined by 4.3%. The current account rose to a surplus given the disruption in imports. Inflation rose from an already high 8.0% in 2019 to 9.4% in 2020. The fiscal deficit narrowed from 3.8% of GDP in 2019 to 3.0% in 2020, while public debt grew from 44.9% of GDP in 2019 to 47.3% in 2020. Growth is forecast to return to 5.0% in 2021 and 5.5% in 2022, with trade and remittances recovering, inflation moderating, and revived imports bringing the current account back into deficit.
    Source: Asian Development Outlook 2021.

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    Turkmenistan

    GDP growth slowed to 1.6% in 2020 from 6.3% in 2019 due to the effects of the COVID-19 pandemic. External demand for hydrocarbons weakened, with growth slowing from 4.1% to 2.0%. Nonhydrocarbon growth also fell, from 8.2% to 1.5%, due the widespread pandemic fallout. On the supply side, growth fell in industry (from 6.9% to 1.3%) and services (7.0% to 1.2%), while agriculture grew from 4.0% to 5.0%. Annual inflation dropped from 13.0% to 10.0%. The current account surplus declined from 1.3% of GDP to 0.5% as exports declined. GDP growth is forecast to recover to 4.8% in 2021 and 4.9% in 2022 as the global recovery boosts prices and demand.
    Source: Asian Development Outlook 2021.

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    Uzbekistan

    Despite the pandemic, the economy grew by 1.6% in 2020, albeit slower than 2019 (5.8%). Pandemic-related restrictions affected the supply side, as growth in all sectors slowed, most notably construction (from 22.9% in 2019 to 9.2% in 2020) and in services (from 6.3% in 2019 to 0.1% in 2020). Private consumption grew by 2.9% in 2020, compared with 5.8% in 2019. While public consumption grew by 4.7% due to stimulus measures, it remained the 5.7%-increase in 2019. The economy is forecast to grow by 4.0% in 2021 and 5.0% in 2022 due to a broad recovery in industry, services, and investment.
    Source: Asian Development Outlook 2021.

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  • East Asia

    People’s Republic of China

    Economic growth slowed to 2.3% in 2020 from 6.0% in 2019. On the demand side, investment was the main driver, contributing 2.2 percentage points. Consumption reduced growth by 0.5% in 2020 after contributing 3.5% in 2019, in line with the drop in household consumption and retail sales. On the supply side, services remained the main contributor to growth contributing 2.1 percentage points in 2020, down from 5.1% in 2019. Economic growth is forecast at 8.1% in 2021 and 5.5%. in 2022 as household consumption continues to recover. On the supply side, hospitality, recreation, and tourism is expected to rebound as more people are vaccinated.
    Source: Asian Development Outlook 2021.

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    Hong Kong, China

    The economic fallout from the COVID-19 pandemic caused GDP to contract by 6.1% in 2020 after declining by 1.2% in 2019. Domestic demand weakened by 10.1% in 2020 with declines in private consumption, gross fixed capital formation, and investment. This was slightly offset by expansionary fiscal policy, as government expenditure rose by 7.8%. Inflation slowed to 0.3% from 2.9% in 2019. The current account surplus grew from 6.0% of GDP in 2019 to 6.6% in 2020, while the overall balance of payments reversed its 0.3% deficit in 2019 to a 9.7% surplus in 2020. GDP growth is forecast to rebound by 4.6% in 2021 and 4.5% in 2022, as private consumption and investment recover.
    Source: Asian Development Outlook 2021.

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    Japan

    The economy contracted 4.8% in 2020, after growing by 0.3% in 2019, due to the COVID-19 pandemic. However, growth returned in Q3 2020, as GDP expanded by 22.8% (seasonally adjusted annualized rate [saar]), driven by a 22%-growth in private consumption due to easing pandemic restrictions and substantial fiscal support. Export growth rose by 33.2% during the quarter due to robust demand for semiconductors and related machinery from the People’s Republic of China. However, with infections rising in November, growth moderated to 11.7% saar in the fourth quarter. Nonetheless, with positive leading indicators and continued policy support, GDP is expected to grow by 2.9% in 2021 and 2.4% in 2022.
    Source: Asian Development Outlook 2021.

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    Republic of Korea

    The economy contracted by 1.0% in 2020 due to the COVID-19 pandemic. It was the largest decline since the 1997–1998 Asian financial crisis. While the country did not impose stringent lockdowns, COVID-19 still disrupted demand, as private consumption fell 5.0% due to physical distancing measures and restrictions on mobility. Both exports and imports declined, given the drop in global trade during the first half of 2020. Meanwhile, public consumption slightly eased the impact, as the government provided subsidies and transfers. Industry and services contracted in 2020. In line with the expected global recovery, the economy is forecast to grow by 3.5% in 2021 and 3.1% in 2022.
    Source: Asian Development Outlook 2021.

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    Mongolia

    After 3 years of robust growth, Mongolia’s economy contracted by 5.3% in 2020 due to the effects of a retrenchment in mining and COVID-19 pandemic-related restrictions. It was the first drop in 11 years and the steepest since 1992. While agriculture grew by 6.2%, industry and services together contracted 7.7%. On the demand side, growth in net exports and in private and public consumption failed to cushion the effects of a 28.8% decline in net foreign direct investment. With favorable terms of trade, as well as high export demand for minerals, GDP is forecast to grow by 4.8% in 2021 and by 5.7% in 2022 as business sentiment improves and the pandemic eases.
    Source: Asian Development Outlook 2021.

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    Taipei,China

    The economy grew by 3.1% in 2020, as the pandemic was well-controlled early on and lockdowns were avoided. Strong exports of semiconductors and other electronics, particularly in the second half of the year, supported the expansion. Exports grew by 1.1% in real terms, imports decreased by 3.9%, leaving net exports contributing 2.7 percentage points to growth. However, private consumption decreased by 2.4% due to pandemic-related restrictions and a sharp drop in tourism, dragging down growth by 1.2 percentage points. Services added another 0.7 points despite the sector growing by 1.2%, with steep declines in transportation, accommodation, and food services. Core inflation, which leaves out food and energy, fell to 0.2% with wholesale prices to 7.8% as energy products, chemical materials, pharmaceuticals, and base metal prices dipped.
    Source: Asian Development Outlook 2021.

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  • Oceania

    Australia

    The economy recovered quickly in the second half of 2020, with GDP reversing its 25.2% second quarter contraction (seasonally adjusted annualized rate) to13.1% growth in the fourth quarter. The main driver was household consumption, which expanded by 18.1%, followed by fixed investments (15.0%) and exports (16.3%). Seasonally adjusted retail sales also grew by 10.0% in the fourth quarter. In October, the consumer sentiment index turned positive. The manufacturing performance index improved. The recovery brought the unemployment rate down from 7.5% in July 2020 to 5.8% in February 2021, while inflation decelerated from 1.6% in 2019 to 0.9% in 2020. Substantial fiscal and monetary support, along with effective COVID-19 measures, helped drive these economic developments and positive outlook. As of 25 March 2021, Consensus Forecasts estimated GDP growth to be 4.3% in 2021 and 3.1% in 2022.
    Source: Asian Development Outlook 2021.

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    New Zealand

    The pandemic response saw GDP growth surge by 70.8% at a seasonally adjusted annualized rate (saar) in the third quarter of 2020, but contract by 5.9% in the fourth quarter. Private consumption grew by 4.2% in the fourth quarter, while fixed capital formation contracted by 5.4%. Net exports cut GDP growth by 10.2 percentage points. Border restrictions halted tourism during peak season, with visitor arrivals decreasing by 99%. The seasonally adjusted unemployment rate rose during the pandemic, although it fell slightly from 5.3% in the third quarter to 4.9% in the fourth quarter. Fourth quarter inflation, at 1.4%, was below the central bank’s 2.0% target. Fiscal and monetary stimulus, and effective containment measures, buoyed the economy. A wage subsidy scheme reduced job losses and supported households.
    Source: Asian Development Outlook 2021.

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  • South Asia

    Afghanistan

    Real GDP fell in 2020 by an estimated 5.0%, as COVID-19 containment measures worsened the impact of persistent violence and political instability. Industry contracted by 5.0% and services by more than 9.0% as global demand for Afghan products plunged. Agriculture, however, grew by 5.0%. Higher food prices doubled inflation to 5.6% in 2020 from 2.3% in 2019. Unemployment jumped to 37.9% from a 23.9% baseline in 2019. The poverty rate worsened from 54.5% in 2017 to around 61%–72% in 2020. Higher government spending and lower revenues widened the fiscal deficit to 20.8% of GDP from 13.9% in 2019. Development grants deepened gross international reserves to $9.7 billion in 2020, covering nearly 20 months of imports. As market activity begins to normalize, growth is expected to rebound to 3.0% in 2021 and improve to 4.0% in 2022.
    Source: Asian Development Outlook 2021.

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    Bangladesh

    GDP was estimated to have grown by 5.2% in fiscal year 2020 (FY2020, ending 30 June), down from 8.2% growth in FY2019 as the COVID-19 pandemic reduced economic activity in the fourth quarter, particularly in industry and to a much lesser extent in services. Exports plummeted in the fourth quarter as buyers canceled garment shipments and new orders evaporated, while COVID-19 containment measures restricted much of the economy for 2 months. GDP growth is projected to rise by 6.8% in FY2021 given domestic economic stimulus and the expected recovery in global growth and trade. In FY2022, GDP growth is expected to edge up further to 7.2% as both exports and imports accelerate with a sustained global recovery.
    Source: Asian Development Outlook 2021.

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    Bhutan

    GDP growth fell from 4.3% in fiscal year 2019 (FY2019, ending 30 June) to 0.9% in FY2020 due to stringent containment measures against COVID-19. Growth in the hard-hit services sector declined to 3.7% from 10.8% in FY2019, while international tourist arrivals fell by 35.0% and tourism revenue by 33.9%. On the demand side, fixed investment declined by 11.7% on weaker public and private investment. In response, government stimulus drove expenditures up from 28.9% to 32.0% of GDP. Monetary policy was also eased, leading to a 19.3% growth in broad money. The economy is expected to contract by 3.4% in FY2021 from the effects of prolonged lockdowns, migrant labor shortages, and reduced domestic demand. Given the successful widespread vaccination program and a return to economic activity, GDP is expected to rise by 3.7% in FY2022.
    Source: Asian Development Outlook 2021.

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    India

    The economy contracted by an estimated 8.0% in fiscal year 2020 (FY2020, ending 31 March 2021) due to COVID-19 containment measures. GDP did expand by 0.4% in the third quarter, prior to the 2021 surge in COVID-19 cases, driven by a 2.1% growth in investment (following a 27.5% decline in the first half). Third quarter exports fell by 4.6% and imports declined by 4.5%. On the supply side, industry rebounded by 2.7% in the third quarter; manufacturing by 1.6%; and utilities by 7.3%. In FY2020, inflation increased to 6.2% from 4.8% in FY2019, mainly due to food prices. In response, the Reserve Bank of India maintained rates at 4.00% after two cuts of 75 basis points and 40 points earlier in FY2020. GDP growth is forecast to rebound by 11.0% in FY2021 as vaccinations become more widespread.
    Source: Asian Development Outlook 2021.

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    Maldives

    With global tourism put on hold by the COVID-19 pandemic, and with tourism accounting for 75% of the economy, GDP contracted by an estimated 32.0% in 2020. Construction plummeted by 28.4%, as imports of building materials, machinery, and electrical equipment dropped 31.3%. Average prices fell by 1.4% in 2020 after rising by 0.2% in 2019, as COVID-19 restrictions hit consumer demand, price controls were imposed on basic food items, global oil prices fell, and households received 30% electricity subsidies for 3 months and 40% water subsidies for 2 months. Government expenditures jumped from 33.4% of GDP in 2019 to 52.9% in 2020. Revenues plunged by 43.1% to 21.7% of GDP. Growth is forecast to rebound to 13.1% in 2021 as travel restrictions ease, and to 14.0% in 2022.
    Source: Asian Development Outlook 2021.

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    Nepal

    The economy contracted by 1.9% in fiscal year 2020 (FY2020, ending 15 July) after growing by 6.7% in FY2019. Industry contracted by 7.4%; services by 3.6%. Agriculture expanded by 2.2%. On the demand side, private consumption remained robust on healthy remittance inflows, while private fixed investment fell by 3.0% and public investment decreased by 5.4%. Inflation rose to 6.2% in FY2020 from 4.6% in FY2019 on an 8.2% increase in food prices. The economy is projected to rebound to 3.1% growth in FY2021 and 5.1% in FY2022 as the global economy recovers and COVID-19 restrictions are lifted.
    Source: Asian Development Outlook 2021.

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    Pakistan

    The economy contracted by 0.4% in fiscal year 2020 (FY2020, ending 30 June), after growing by 1.9% in FY2019, due to COVID-19 restrictions and supply chain disruptions. Industry contracted by 2.6% after falling 2.3% in FY2019 as pandemic-related shocks exacerbated the impact of a rupee depreciation and fiscal tightening. Agriculture helped mitigate some of the economic decline, growing by 2.7% in FY2020, up from 0.6% in FY2019. On the demand side, private consumption (comprising 79% of GDP) contracted by 3.7% in FY2020, after expanding 2.9% in FY2019. While imports declined by 18.2% due to lower oil prices and depressed domestic demand, exports fell by 7.2% due to lower global demand. GDP is forecast to grow by 2.0% in FY2021 and by 4.0% in FY2022 as COVID-19 related restrictions ease, triggering a broad recovery.
    Source: Asian Development Outlook 2021.

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    Sri Lanka

    GDP contracted by 3.6% in 2020. The economy contracted 1.8% in the first quarter of 2020, largely before the pandemic, falling sharply by 16.4% during the second quarter general lockdown. By early June, successful containment allowed much of the economy to reopen, leading to 1.3% growth in the third quarter. The unemployment rate rose from 4.8% in 2019 to 5.5% in 2020. Industry contracted most, falling by 6.9%, with construction down by 13.2% and manufacturing by 3.9%. Services fell by 1.5%, with transportation down by 6.7% and accommodation and restaurants plummeting by 39.4%. This was mitigated in part by a 15.4% growth in telecommunications, 10.9% in finance, and 1.4% in wholesale and retail trade. Average annual inflation, as measured by the Colombo consumer price index, rose from 4.3% in 2019 to 4.6% in 2020.
    Source: Asian Development Outlook 2021.

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  • Southeast Asia

    Brunei Darussalam

    The COVID-19 pandemic slowed economic growth to 1.2% in 2020, after expanding by 3.9% in 2019. Declines in both government consumption and investment were offset by growth in net exports and in private consumption. On the supply side, rising production from a new oil refinery increased growth in the oil and gas sector. This cushioned a contraction in services and other industries. While the economy is projected to grow by 2.5% in 2021 and 3.0% in 2022, growth may be dependent on an external environment expecting a recovery in global demand and higher oil and gas prices.
    Source: Asian Development Outlook 2021.

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    Cambodia

    The economy contracted by 3.1% in 2020 due to the impact of the COVID-19 pandemic, even though Cambodia did not experience a major outbreak. Nonetheless, the pandemic caused a total shutdown of international tourism; a drop in exports of garments, footwear, and travel goods; and a contraction in construction. The economy is forecast to expand by 4.0% in 2021 and 5.5% in 2022. Industrial production is expected to grow strongly, expanding by 7.1% in 2021 and 7.0% in 2022 as garments, footwear, and travel goods exports rebound and light manufacturing expands. Agriculture is also expected to pick up, growing by 1.3% in 2021 and 1.2% in 2022.
    Source: Asian Development Outlook 2021.

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    Indonesia

    The economy contracted by 2.1% in 2020 after growing an average 5.0% over the previous 5 years. The COVID-19 pandemic disrupted the domestic economy with sharp declines in private consumption (by 2.7%) and fixed investment (by 4.9%). Government spending grew by 1.9% in 2020 with reallocations to fiscal stimulus programs. Net external demand contributed 1.1 percentage point to GDP growth as imports contracted (by 14.7%) more than exports (by 7.7%). Services fell by 1.4% in 2020 after growing by 6.4% in 2019. Inflation averaged 2.0% in 2020. Poverty incidence increased to 10.2%; the unemployment rate was the highest in 9 years at 7.1% in August 2020. The fiscal deficit grew to 6.1% of GDP in 2020 compared with 2.2% in 2019. With accommodative fiscal and monetary policies, a recovery in domestic demand, and an improved external environment, GDP is forecast to grow by 4.5% in 2021 and 5.0% in 2022.
    Source: Asian Development Outlook 2021.

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    Lao People’s Democratic Republic

    Real GDP contracted by 0.5% in 2020 after growing by 4.7% in 2019, largely due to the COVID-19 pandemic. Severe border restrictions stifled domestic and external demand. The unemployment rate rose to 23.4% in 2020 from 16.0% in 2018. Services, accounting for 43.6% of GDP, contracted by 5.5% as tourism stopped. Industry (30.8% of GDP) grew by 6.2% due to higher electricity production; construction grew as large infrastructure projects proceeded; and agriculture (15.5% of GDP) grew by 2.1% on improved harvests. Inflation rose to 5.1% from 3.3% in 2019, mostly due to rising food prices. The budget deficit increased to 5.3% of GDP from 3.3% in 2019. Real GDP is expected to grow by 4.0% in 2021 and 4.5% in 2022 on higher agriculture production, sustained power generation, and ongoing large infrastructure projects offsetting the effects of a slow recovery in services.
    Source: Asian Development Outlook 2021.

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    Malaysia

    GDP contracted by 5.6% in 2020 due to the COVID-19 pandemic and as falling oil prices hurt exports. Mobility restrictions, rising unemployment, and falling wages dented domestic demand, with private consumption contracting by 2.5%. Similarly, investment shrank by 12.2% and exports by 8.8%. Consumer prices fell by 1.1% despite a cut in the overnight policy rate to 1.75% in July. The fiscal deficit widened to 6.2% of GDP from 3.4% in 2019 as government revenue declined by 14.9% in. GDP growth was forecast to rebound to 6.0% in 2021 before the mid-2021 surge in COVID-19 cases. GDP is forecast to grow by 5.7% in 2022.
    Source: Asian Development Outlook 2021.

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    Myanmar

    GDP growth slowed to 3.3% in fiscal year 2020 (FY2020, ending 30 September) from 6.8% in FY2019 because of the COVID-19 pandemic. Industry grew by an estimated 5.1% in FY2020 (from 8.6% in FY2019) while services decelerated to 2.5% (from 8.3%). Higher demand and favorable weather helped agriculture grow by an estimated 1.8% in FY2020 (1.6% in FY2019). Inflation eased to 5.7% in FY2020 (8.6% in FY2019). Sharply rising imports widened the current account deficit to 4.0% in FY2020 (0.4% in FY2019). To mitigate the pandemic impact, the central bank lowered its policy rate from 10.0% to 7.0%, while the government provided tax relief and raised public spending on health and infrastructure. The fiscal deficit reached 4.9% of GDP in FY2020. In FY2021, the economy is forecast to contract by 9.8% due to government disruptions, mass political protests, and new waves of COVID-19 infections.
    Source: Asian Development Outlook 2021.

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    Philippines

    GDP fell by 9.6% in 2020 after growing by 6.1% in 2019, given the severe impact of the COVID-19 pandemic. The contraction was sharpest in the second quarter, falling by 17.0% during a period of strict lockdowns. Steep declines in consumption (7.9%) and investment (27.5%) were only partly offset by higher government spending (which grew by 10.5%). The unemployment rate peaked at 17.6% in April 2020 before easing to 8.7% in October (well above the 5.3% rate in January). Services, which accounts for 61% of GDP, fell by 9.2% in 2020; industry fell by 13.2%; and agriculture fell by a slight 0.2%. Inflation averaged 2.6% in 2020, edging higher toward yearend on higher food prices (it rose to 4.5% during the first quarter of 2021). Government debt increased to 54.6% of GDP by end-2020, compared with 39.6% at end-2019. GDP growth is forecast to rise to 4.5% in 2021 and 5.5% in 2022.
    Source: Asian Development Outlook 2021.

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    Singapore

    Real output fell by 5.4% in 2020 due to the pandemic. Construction plummeted by 35.9% and services dropped by 6.9%. Manufacturing, however, grew by 7.3%. Domestic demand contracted by 10.7% as private consumption and investment fell in double digits. Headline and core inflation deflated by 0.2% in 2020. With a 6.7% drop in export and 7.7% contraction in import values, the trade surplus widened to 27.5% of GDP. Gross international reserves increased grew to $362.3 billion, covering about 9 months of imports. The government spent nearly $100 billion for households and businesses impacted the pandemic, increasing government spending by 63.2%. With lower tax receipts, the budget deficit swelled to about 13.8% of GDP in fiscal year 2020 (FY2020, ending 31 March 2021). Economic growth is forecast to recover to 6.0% in 2021 and 4.1% in 2022.
    Source: Asian Development Outlook 2021.

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    Thailand

    GDP contracted by 6.1% in 2020 after growing 2.3% in 2019. The spread of COVID-19 and stringent pandemic containment measures in the second quarter of 2020 disrupted economic activity. Tourism was hardest hit, as the government imposed travel restrictions on foreign tourists. The economy is forecast to grow by 3.0% in 2021—a mild recovery as the pandemic continues to hamper world trade and international travel. The economy is expected to rebound in 2022, with growth forecast to rise to 4.5% with more people vaccinated and a revival in global trade and tourism. Exports of goods and services are projected to rise by 5.6% in 2021 and 12.5% in 2022.
    Source: Asian Development Outlook 2021.

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    Timor-Leste *

    GDP contracted in 2020 by an estimated 7.9%, reversing the modest 1.8% expansion in 2019. The economy had to contend with the effects of the pandemic, a domestic political crisis, and the delayed passing of the 2020 budget. Private consumption fell by 3.1%, while private investment dropped by 39.0%. Public capital spending was down by about 50%. Public consumption grew marginally by 1.0%, due a pandemic stimulus package. Nonetheless, the economy is expected to grow by 3.4% in 2021 and 4.3% in 2022. Government spending is expected to increase 30% over the next 3 years under an Economic Recovery Plan, financed primarily by the Petroleum Fund.
    Source: Asian Development Outlook 2021.

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    Viet Nam

    Economic growth fell to 2.9% in 2020, down from the 7.0% growth in 2019, despite an effective COVID-19 response. Agriculture grew by 2.7% in 2020 from 2.0% in 2019, due to proactive export promotion . Industry and construction growth reached 4.0% in 2020, contributing 1.4 percentage points to growth, as effective COVID-19 controls led to a stable labor supply. Construction growth decreased to 6.8% in 2020 from 9.1% in 2019. Overall, services contribution to GDP growth dropped to 0.9 percentage points in 2020 from 2.8% in 2019. Consumption growth amounted to only 1.1% in 2020, with its contribution to GDP dropping to 0.8 percentage points. Net exports of goods and services added 0.3 points to growth, with 4.4% export growth above import growth of 3.9%. Inflation averaged 3.2% in 2020, slightly higher than 2.8% in 2019, despite an unexpected increase in pork prices in the first quarter of 2020 and severe floods in the third quarter.
    Source: Asian Development Outlook 2021.

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    * part of Southeast Asia beginning 1 October 2019

  • The Pacific

    Cook Islands

    Border closures shut down tourism, causing the economy to contract by 5.9% in 2020, a reversal of the 5.3% growth in 2019. The economy is projected to contract further by 26.0% in 2021 with a gradual recovery toward the end of the year. The economy is forecast to grow by 6.0% in 2022. Inflation remained a low 0.7% in 2020, expected to rise to 1.0% in 2021 before reverting to 0.7% in 2022. The 2020 fiscal deficit of 28% of GDP is projected to rise to 33.1% in 2021 as spending increases despite a 45.2% decline in revenues. The deficit should taper to 11.2% by 2022. The current account also fell into deficit (6.0% of GDP in 2020) and is expected to fall further (12.5% in 2021). A tourism revival should bring the current account into surplus in 2022 (5.1%).
    Source: Asian Development Outlook 2021.

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    Fiji Islands

    The pandemic forced a collapse in tourism, causing a steep 19.0% economic contraction in 2020. Visitor arrivals dropped by 83.6% to their lowest level since 1970. One-third of the labor force was either out of work or on reduced hours. The fiscal deficit rose to 8.2% of GDP in fiscal year 2020 (FY2020, ending 31 July) from 3.6% in FY2019, raising the country’s debt to 65.5% of GDP by July 2020. The current account deficit widened to 17.8% of GDP. Tourism receipts to plummet by 84.8% to less than $5.0 million (from $783.3 million previously). Still, remittances rose by 11.1% to $301 million, and foreign borrowings helped prop up foreign reserves, enough to cover 7.3 months of imports. A revival in tourism and public confidence should see GDP grow by 2.0% in 2021, accelerating to 7.3% in 2022.
    Source: Asian Development Outlook 2021.

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    Kiribati

    Economic growth slowed to 0.6% in 2020 from 2.4% in 2019, largely due to pandemic-related restrictions. Border closures disrupted the flow of goods and people into the country, interrupting infrastructure projects as well as services, as international consultants and contractors could not enter. This adversely affected hotels, restaurants, and retail activity. Restrictions continued into 2021, with GDP forecast to contract by 0.2%. However, prospects for 2022 remain upbeat, with GDP expected to grow by 2.3% as major infrastructure and locally financed construction resume.
    Source: Asian Development Outlook 2021.

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    Marshall Islands

    The economy contracted by 5.5% in fiscal year 2020 (FY2020, ending 30 September) due to the impact of the COVID-19 pandemic. Travel bans, other mobility restrictions, and quarantines lowered fishing output and related manufacturing, stalled hospitality services, and limited local demand. This kept inflation low (0.3%) and helped temper the impact of higher prices due to supply bottlenecks. Lower imports narrowed the merchandise trade deficit, while increased grants from development partners increased the current account surplus to 13.8% of GDP from 9.4% in FY2019. Construction, trade, and transportation are expected to hurt the economy in FY2021, with a 1.4% contraction forecast. Growth is expected to return in FY2022, with GDP expanding by 2.5%.
    Source: Asian Development Outlook 2021.

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    Micronesia, Federated States of

    The economy contracted by an estimated 5.4% in fiscal year 2020 (FY2020, ending 30 September) as mobility restrictions were enforced to combat the COVID-19 pandemic. The government earmarked $58.7 million as fiscal stimulus. However, the pandemic also eroded tax revenues as fishing license revenues declined. Inflation increased to 1.6% in FY2020 from pandemic-related supply-side disruptions. GDP is forecast to contract by 1.8% in FY2021 before rebounding to 2.0% growth in FY2022. Inflation is expected to rise to 1.9% in FY2021 and 2.0% in FY2022.
    Source: Asian Development Outlook 2021.

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    Nauru

    The economy contracted by 0.8% in fiscal year 2020 (FY2020, ending 30 June) from 1.0% growth in FY2019 due to pandemic-related disruptions in travel and shipping. Government expenditure rose by 22.3%, with funds used on health facilities and to support state-owned enterprises providing vital public services. The current account surplus fell to 4.6% of GDP (from 10.4%) as services exports suffered from the reduced operations of Nauru Airlines. GDP growth is expected to bounce back to 1.5% in FY2021 as infrastructure projects, notably the Nauru Port rehabilitation and upgrade, continue. Growth is forecast to moderate to 1.0% in FY2022 with the closure of an Australia-financed Regional Processing Centre.
    Source: Asian Development Outlook 2021.

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    Niue

    Dramatically reduced tourist arrivals likely caused the economy to contract in fiscal year 2020 (FY2020, ended 30 June), ending a 7-year stretch of uninterrupted growth averaging 4.6% annually. In addition, travel restrictions stalled capital projects financed by development partners. An even more severe contraction is forecast for FY2021 as tourism (one-third of GDP) remains suspended. Economic recovery is projected for FY2022. This assumes a travel bubble with New Zealand is established during the last quarter of FY2021, following parallel vaccination drives with Niue vaccinations subsidized by New Zealand.
    Source: Asian Development Outlook 2021.

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    Palau

    The tourism-driven economy contracted by 10.3% in fiscal year 2020 (FY2020, ending 30 September), following a 1.8% decline in FY2019. Global travel restrictions resulted into a sharp decline in tourist arrivals by 99% year-on-year (y-o-y) from April 2020 to September 2020, after drops of 43% y-o-y in February 2020 and 70% y-o-y in March. Additional spending under the Coronavirus Relief One-Stop Shop Program, coupled with a 25% decline in tax collections, led to the first fiscal deficit in a decade. The current account deficit widened to 32.6% of GDP, given the collapse in tourism receipts. Another 7.8% contraction is projected in FY2021, due to continued declines in arrivals. The economy is expected to begin recovering, growing by 10.4% in FY2022 with an expected rebound in tourism.
    Source: Asian Development Outlook 2021.

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    Papua New Guinea

    The economy contracted by 3.3% in 2020 as it was battered by the COVID-19 pandemic. Lockdowns crippled business activity and trade. International travel was restricted for most of 2020, severely hampering business travel and inward investment. It also delayed major infrastructure projects. The economy is forecast to grow by 2.5% in 2021 and 3.0% in 2022 as the economy slowly recovers. However, the economic environment will remain challenging, with real GDP not expected to match 2019 levels until 2022. A weak business and investment climate will likely persist, given continuing foreign exchange shortages, a government critical of foreign investment, and the continuing COVID-19 pandemic.
    Source: Asian Development Outlook 2021.

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    Samoa

    GDP contracted by 3.2% in fiscal year 2020 (FY2020, ending 30 June) despite government stimulus equivalent to 3.1% of GDP. Visitor arrivals fell by 30.2%, driving commerce down by 4.4% and manufacturing by 12.8%. Remittances remained strong, however, growing by 4.9%. Economic recovery is forecast for 2022, only if people are fully vaccinated and international travelers return in substantial numbers. Despite further government stimulus (4.2% of GDP), GDP is forecast to contract by 9.2% in FY2021 before recovering to 3.1% growth in 2022 as the competition for tourists intensifies. After dropping to 1.5% in FY2020, consumer prices turned negative in the second half of 2020. Deflation is expected to reach 2.5% in FY2021 as agricultural production increases, import prices drop and government subsidies for domestic utilities rise. Inflation is forecast to rise to 2.7% in FY2022.
    Source: Asian Development Outlook 2021.

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    Solomon Islands

    The economy contracted by 4.5% in 2020, reversing the 1.9% growth in 2019. Due to quarantine restrictions, the economically important fish catch declined by 40%. Log output declined by 12%, in part by the impact of Cyclone Harold, as was crop production. Construction slowed as equipment, materials and workers from overseas were delayed. While a pandemic-related stimulus package led to a 1.7%-growth in public-related services, the fiscal deficit widened to 2.5% of GDP. The economy is forecast to grow by 1.0% in 2021 and 4.5% in 2022 as fishing and construction rebound.
    Source: Asian Development Outlook 2021.

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    Tonga

    The twin shocks of Tropical Cyclone Harold in April 2020 and the COVID-19 pandemic led the economy to contract by an estimated 0.8% in fiscal year 2020 (FY2020, ending 30 June). Construction and tourism declined most. A deeper 5.3% contraction is forecast for FY2021 with further declines in tourism and delays in construction projects. Growth is forecast to return to 1.8% in FY2022. Inflation slowed to 0.2% in FY2020 and is expected to stay at 0.8% in FY2021. The fiscal surplus was 5.3% of GDP in FY2020, but is expected to narrow to 0.8% in FY2021, reversing into a 5.9% deficit in FY2022 due to tax weakness and grant normalization. The current account deficit widened to 3.8% of GDP in FY2020 and is projected to widen to 11.5% in FY2021 before easing to 9.4% in FY2022 as tourism reopens .
    Source: Asian Development Outlook 2021.

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    Tuvalu

    GDP grew by an estimated 0.5% in 2020 as fiscal stimulus remained stable despite a drop in recurrent revenue. Early restrictions on international travel kept the country COVID-19 free but hampered capital projects. The medium-term growth outlook remains positive. GDP is forecast to grow by 2.5% in 2021 and 3.0% in 2022, supported by new infrastructure projects under the government’s 2021–2030 strategic plan. Higher fishing revenue and budget support from development partners helped offset the government’s pandemic-related spending to procure personal protective equipment, repatriate citizens, and cover cash relief payments.
    Source: Asian Development Outlook 2021.

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    Vanuatu

    Pandemic-related trade and travel restrictions and the effects of Cyclone Harold caused the economy to contract by 9.8% in 2020, reversing the 3.5% growth in 2019. Travel restrictions resulted into a sharp drop in visitor arrivals by air (82%) and by cruise ship (60%). Agriculture and industry contracted as Cyclone Harold damaged root crops and other staples. The government increased health spending but it was not enough to offset the decline in capital spending due to import restrictions. Growth is expected to return to 2.0% in 2021 and 4.0% in 2022 as pandemic-related restrictions ease. Travel bubbles with main tourism markets—Australia, New Zealand, and New Caledonia—will also help speed economic recovery.
    Source: Asian Development Outlook 2021.

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