AEIR 2019/2020

  • Central Asia

    Armenia

    Growth recovered to 7.6% in 2019 from 5.2% in 2018 on strong gains in services, industry, and private consumption. On the supply side, growth accelerated in industry and services, but not agriculture. On the demand side, private consumption powered the expansion, while net exports and investment remained sluggish. With the impact of COVID-19, GDP growth is projected to slow to 2.2% in 2020, recovering to 4.5% in 2021 as reforms initiated in 2019 and 2020 take hold. Inflation and the current account deficit are expected to rise slightly in 2020 before moderating in 2021.
    Source: Asian Development Outlook 2020, ADB

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    Azerbaijan

    GDP growth accelerated to 2.2% in 2019 from 1.4% in 2018. On the supply side, industry grew 0.7%, reversing an average decline of 2.9% in 2015–2018. Petroleum recovered while a 7.9% growth in manufacturing largely offset a steep drop in construction. Agricultural growth rose to 7.3% (from 4.6%), while services grew by 3.7% on gains in trade, communications, and tourism. On the demand side, consumption and net exports expanded. Inflation rose to 2.6% but remain within the central bank’s target band of 2%-6%. A decline in oil prices, amid the COVID-19 outbreak, will slash growth to 0.5% in 2020, but higher oil and gas production are projected to raise growth to 1.5% in 2021.
    Source: Asian Development Outlook 2020, ADB

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    Georgia

    Infrastructure spending and continued export gains boosted growth in 2019. Growth is estimated to have accelerated to 5.1% in 2019 from 4.8% in 2018. Inflation nearly doubled, to 4.9% from 2.6% in 2018 with currency depreciation. Prices rose sharply toward yearend. The current account deficit narrowed from the equivalent of 6.8% of GDP in 2018 to an historic low of 4.5% in 2019. It should fall further by 2021 with the continued decline in merchandise imports. Zero growth is projected for 2020 as monetary tightening and the impact of COVID-19 constrain consumption and limit expansion in tourism and trade. Growth should recover to 4.5% in 2021 as increased bank credit to households, higher foreign direct investment, and a rebound in worker remittances fuel domestic demand.
    Source: Asian Development Outlook 2020, ADB

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    Kazakhstan

    GDP growth rose to 4.5% in 2019 from 4.1% in 2018 as higher consumption, investment, and services drove the expansion. Most supply side sectors, however, lost steam, with growth in agriculture slowing to 0.9% (from 3.8% in 2018) and industry slipping to 3.8% (from 4.4%). Services did well, growing by 4.4% (from 3.9% in 2018). On the demand side, consumption expanded markedly, jumping from 1.6% growth during the first 9 months of 2018 to 6.7% for the same period in 2019. In addition, investment grew by 8.9%.in 2019, up from 2.8% in 2018. Despite the strong performance, however, the 2020 forecast accounts for a hit from the plunge in oil prices and the impact of COVID-19. GDP growth is expected to drop to 1.8% in 2020 before recovering to 3.6% in 2021.
    Source: Asian Development Outlook 2020, ADB

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    Kyrgyz Republic

    GDP growth accelerated to 4.5% in 2019 from 3.8% in 2018 on steady growth in gold production and robust manufacturing. On the demand side, growth was supported by higher public investment and higher private consumption due to increased wages in public schools and hospitals. Inflation slowed to 1.1% in 2019 from 1.5% in 2018, with prices held down by a 0.3% Kyrgyz som appreciation against the US dollar. The fiscal deficit narrowed to 0.1% of GDP in 2019 and external government debt fell to 44.8% of GDP by end-2019 from 48.0% in end-2018. The current account deficit narrowed to 10.0% of GDP in 2019. GDP is forecast to grow by 4.0% in 2020. While the COVID-19 impact could benefit gold exports, import-dependent industries could suffer. Economic growth should recover to 4.5% in 2021.
    Source: Asian Development Outlook 2020, ADB

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    Tajikistan

    GDP grew marginally to 7.5% in 2019 from 7.3% in 2018 on higher remittances and increased public investment. On the demand side, increased consumer demand boosted growth as fixed capital investment and net exports fell. On the supply side, industry expanded by 13.6% with gains from mining, manufacturing, and electricity generation; agricultural growth accelerated from 4.0% to 7.1%; and services increased from 2.1% to 2.9%. Inflation, however, surged from 5.4% to 8.0% due to unresolved banking problems. With the COVID-19 outbreak, growth is forecast slow to 5.5% in 2020, receding further to 5.0% in 2021 as investments and remittances are expected to slow.
    Source: Asian Development Outlook 2020, ADB

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    Turkmenistan

    The economy grew 6.3% in 2019, slightly up from 6.2% in 2018, on higher oil and gas output. On the demand side, increased gas exports and public investment bolstered growth. However, private consumption growth remained subdued as double-digit inflation curbed real household incomes. To contain inflation, the Central Bank of Turkmenistan promoted noncash payments while maintaining a fixed exchange rate. As export growth slowed, the current account dipped into a slight deficit of 0.6% of GDP, reversing the 5.7% surplus in 2018. GDP growth is forecast to moderate to 6.0% in 2020 and 5.8% in 2021 as the hydrocarbon industry expansion slows.
    Source: Asian Development Outlook 2020, ADB

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    Uzbekistan

    GDP growth rose moderately in 2019, to 5.6% from 5.4% in 2018. Private consumption slowed slightly, growing by 5.7% from 5.9% in 2018. On the supply side, agriculture sector grew 2.5% in 2019 from 0.3% in 2018 on abundant water supply and price incentives for cotton and wheat. Growth in services eased to 5.1% in 2019 from 5.5% in 2018. Meanwhile, industrial growth fell to 6.6% in 2019 from 10.8% in 2018 as hydrocarbon production grew by only 1.0% in 2019, far lower than the 26.5% increase in 2018. The economy is forecast to grow 4.7% in 2020 given the impact of COVID-19 and lower demand and prices for natural gas and copper. Growth should rebound to 5.8% in 2021.
    Source: Asian Development Outlook 2020, ADB

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  • East Asia

    People’s Republic of China

    Economic growth slowed to 6.1% in 2019 from 6.7% in 2018. Increased special bond issuance by local governments led to moderating infrastructure investment growth in the first 3 quarters of 2019. However, consumption, the main driver of growth, decelerated due to the softening of both disposable income and consumption expenditure. Despite the reduction in value-added tax, both corporate profits and domestic demand softened, which led to a sharp decline in manufacturing investment. Net exports increased slightly, contributing 0.7% to GDP growth, as a phase-one agreement reached with the United States in mid-December 2019 brought a stop to new tariffs and reduced rates on some bilateral tariffs imposed earlier. The wide impact of COVID-19 on the economy will drive growth down to 2.3% in 2020, bouncing back to 7.3% in 2021.
    Source: Asian Development Outlook 2020, ADB

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    Hong Kong, China

    GDP contracted by 1.2% in 2019 after growing by 2.9% in 2018. Civil unrest and the global economic slowdown left investment sentiment, private consumption, and tourism-dependent businesses all anemic. Domestic demand weakened significantly from declines in private consumption and fixed investment, which led to a 1.1% contraction in real terms. Exports fell 4.7% in real terms, while imports decreased more sharply at 6.8%. However, net exports proved positive, adding 2.3 percentage points to growth. Meanwhile, government consumption grew 5.1%, adding 0.5 percentage points to growth, on new and higher allocations for public services. On the supply side, most sectors weakened. The exceptions were information and communications technology, which expanded by 5.4%; and real estate, professional, and business services, which grew by 1.4%. GDP is forecast to contract further by 3.3% in 2020, following domestic unrest, trade tensions, and the impact of the COVID-19 pandemic.
    Source: Asian Development Outlook 2020, ADB

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    Japan

    Japan continued to recover in 2019 on strong domestic demand. The economy expanded 0.7% from 0.3% growth in 2018. While both private consumption and private investment contributed to declining growth in the second half of 2019, net exports provided a much-needed boost. In January 2020, machinery orders increased by 2.9% month-on-month. However, this positive start was disrupted by the COVID-19 outbreak, which initially led to a severe economic downturn in the People’s Republic of China, and the postponement of the 2020 Summer Olympics. Thus, growth is forecast to contract 1.5% in 2020 before returning to 0.9% growth in 2021 as the government adopts stimulus measures.
    Source: Asian Development Outlook 2020, ADB

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    Republic of Korea

    GDP grew by 2.0% in 2019, the lowest in a decade, down from 2.7% in 2018. By sector, industry decelerated sharply to 0.9% in 2019 from 2.1% in 2018, as the government cut back on coal use and fuel reliance. Growth in services also slowed to 2.7% in 2019 from 3.2% in 2018. On the demand side, investment contracted by 2.5% in 2019 after a 1.8% contraction in 2018. Private consumption slowed to 1.9% due to declining wages and worsening consumer confidence. Trade tensions between the United States and People’s Republic of China cut into exports, which moderated to 1.7% in 2019 from 3.5 in 2018.  As growth in major trading partners deteriorates, COVID-19 spreads globally, and access to export markets tightens, growth is expected to slow markedly to 1.3% in 2020, picking up to 2.3% in 2021.
    Source: Asian Development Outlook 2020, ADB

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    Mongolia

    After peaking at 7.2% in 2018, a slowdown in mining, transportation and manufacturing led GDP growth down to 5.1% in 2019. Output slumped for gold, copper, zinc, and fluorspar, with the effects spilling over to industry and services, which slowed as well. However, agriculture, including crops and livestock, grew by 8.1% in 2019. On the demand side, net exports were a significant drag on growth, subtracting 10.4 percentage points to growth. Large gains in investment and private consumption helped cushion the decline. Mining and crude oil exports will continue to decline due to the slowdown in the People’s Republic of China’s and the impact of the COVID-19 pandemic. Growth is forecast to decline to 2.1% in 2020, recovering to 4.6% in 2021.
    Source: Asian Development Outlook 2020, ADB

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    Taipei,China

    GDP growth stabilized at 2.7% in 2019, the same as in 2018. Domestic demand remained the main driver of growth. Gross capital formation expanded by 5.4% as several companies re-shored operations, mainly from the People’s Republic of China. On the supply side, growth in services fell slightly to 2.7% in 2019 as wholesale and retail trade growth slowed. The cyclical downturn in semiconductors decelerated industrial growth to 0.6% from 3.2%, while excessive rainfall led agriculture to contract. Inflation moderated to 0.6% despite rising food prices, and the current account surplus narrowed from 11.6% of GDP in 2018 to 10.5%. GDP growth is forecast to slow to 1.8% in 2020 on the impact of COVID-19, rising to 2.5% in 2021 as exports and public investment expands.
    Source: Asian Development Outlook 2020, ADB

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  • Oceania

    Australia

    GDP growth slipped to 2.1% in Q4 of 2019 from 2.2% in Q3. Weaker fixed investment reduced growth by 0.9 percentage points (ppts), while consumption added 1.5 ppts, net exports 0.4 ppts, and change in inventories 0.7 ppts. Between January and February 2020, consumer and business sentiment improved but remained negative—Australian Industry Group performance dropped further to 44.3, while unemployment fell marginally to 5.1%. Inflation rose to 1.8% in Q4 but remained below target. With the impact of the 2019–2020 bushfires and COVID-19, GDP is expected to contract by 0.6% in 2020. The central bank’s accommodative monetary policy stance will allow support for stimulus packages to help growth recover to 3.8% in 2021.
    Source: Asian Development Outlook 2020, ADB

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    New Zealand

    GDP growth slowed to 0.6% in Q4 from 2.3% in Q3 of 2019 as changes in inventories subtracted 2.6 percentage points (ppts) from growth and fixed investment 0.1 ppt. Consumption contributed 2.4 ppts, most of it government consumption, and net exports 1.3 ppts. Domestic production will be constrained by international and domestic plans to limit the spread of COVID-19 and its severe impact on travel and trade, which affects both supply and demand. To mitigate its economic impact, the government announced a NZ$12.1 billion stimulus package that includes wage subsidies, additional welfare payments, and business tax breaks. More stimulus may be announced at the annual budget meeting in May.
    Source: Asian Development Outlook 2020, ADB

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  • South Asia

    Afghanistan

    Economic growth rose to an estimated 3.0% in 2019 from 2.7% in 2018. Welcome rains helped agriculture grow about 5.0% after a drought-induced 0.9% contraction in 2018. With agriculture providing 19.0% of GDP, the recovery boosted incomes and private consumption. This compensated for a slowdown in industry (from its strong 7.6% expansion in 2018) and sluggish growth in services. Inflation averaged 2.3% as the afghani depreciated and food inflation rose to 3.8%. The current account deficit widened to 32.2% of GDP from 27.5% in 2018 as exports fell by 10.4%. GDP growth is expected to remain unchanged at 3.0% in 2020, improving to 4.0% in 2021, supported by better prospects for long-term political stability and security.
    Source: Asian Development Outlook 2020, ADB

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    Bangladesh

    GDP grew by 8.2% in FY2019 on robust growth in both industry and services. Before the COVID-19 global pandemic struck, GDP growth was expected to moderate but remain strong at 7.8% in FY2020. However, the spillovers from global pandemic could cost Bangladesh from 4.3% of GDP (under a 3-month containment scenario) to 6.6% (6-month scenario). Private investment is expected to remain subdued. Expanded government development spending, favorable trends in power production, and reforms to better mobilize domestic resources may reduce the effects of the pandemic. Inflation is expected to stay in check, and the current account deficit will narrow further.
    Asian Development Outlook 2020; “An Updated Assessment of the Economic Impact of COVID-19.” ADB Briefs No. 133. May 2020.

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    Bhutan

    GDP growth increased to an estimated 4.4% in FY2019 from 3.8% in FY2018 due to a rebalancing from fixed investments toward consumption. However, declines in industry and government investment limited the expansion. Both construction and hydropower contracted by 5.4% and 5.0%, respectively. These declines were offset by robust growth in services (10.4%), tourism (25.0%), and agriculture (3.8%). On the demand side, investment declined by 2.6% on decreased capital expenditures. Growth is expected to rise to 5.2% in FY2020 on increased hydropower capacity, assumed normal water flow, and an anticipated sharp increase in government expenditure to combat COVID-19.
    Source: Asian Development Outlook 2020, ADB

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    India

    Economic growth continued to slow to 5.0% in FY2019—from 6.1% in FY2018 and well below the 7.0% average of the past decade—as credit constraints undermined domestic demand. Agriculture grew by 3.7% in FY2019, while industry growth slowed to 1.8% from weak manufacturing and construction. Services added 3.5 percentage points to growth, expanding 7.0% mainly due to improved financial services, real estate, and other professional services. On the demand side, a decline in investment severely dragged down growth. After growing an annual average 7.2% over the past decade, gross fixed capital formation contracted by 0.6% in FY2019, its worst showing since FY2002. GDP growth is forecast to slow further to 4.0% in FY2020 before rebounding sharply to 6.2% in FY2021, assuming the COVID-19 pandemic is contained by the second half of 2020.
    Source: Asian Development Outlook 2020, ADB

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    Maldives

    A steep fall in construction and moderation in tourism income slowed GDP growth to 5.7% in 2019 from 6.9% in 2018. Large construction projects were completed, while substantial delays slowed the government’s investment program. Despite a 14.7% growth in tourist arrivals—a record 1.7 million visitors—growth in tourism receipts slowed to 4.3% in 2019 from 10.4% in 2018. Price controls on staples helped inflation at 0.2%. The current account deficit narrowed to an estimated 21.5% of GDP. The COVID-19 pandemic could contract GDP by 6.2%–12.3% in 2020 before an expected recovery in 2021.
    Source: Asian Development Outlook 2020, ADB

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    Nepal

    The economy grew by 7.1% in FY2019 (from 6.7% a year earlier) on strong agricultural growth, buoyant tourist arrivals, remittances, and private investment. Services growth, in particular, rose to 7.3%, while industry continued to expand by 8.1%. On the demand side, consumption expenditure and private investment remained robust. Meanwhile, public investment increased by just 5.5%, following a 54.2% surge in FY2018, due to construction delays. Inflation increased slightly to 4.6% (from 4.2%) as food prices rose. GDP growth is forecast to slow to 5.3% in FY2020, mainly due to the impact of the COVID-19 pandemic on tourism and remittances.
    Source: Asian Development Outlook 2020, ADB

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    Pakistan

    GDP declined to 3.3% in FY2019 from 5.5% in FY2018, largely due to fiscal consolidation and monetary tightening measures agreed with the International Monetary Fund for a July 2019 approved Extended Fund Facility. The contribution of consumption to GDP growth fell to 4.1% in FY2019 from 6.1% in FY2018 as incomes fell. Despite the lower growth, inflation rose to 6.8% (from 4.7% in FY2018) on poor harvests, tariff increases, and the rupee’s sharp depreciation against the US dollar. Economic growth is expected to slow further to 2.6% in FY2020 as stabilization efforts continue amid the impact of the COVID-19 pandemic. Growth is expected to accelerate to 3.2% in FY2021, driven by a rebound in investment as the rupee stabilizes and macroeconomic imbalances are corrected.
    Source: Asian Development Outlook 2020, ADB

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    Sri Lanka

    GDP growth slowed to an estimated 2.6% in 2019 from 3.2% in 2018. Following the resolution of a political impasse near the end of 2018, growth rebounded only to be disrupted by the Easter Sunday terror attacks. Growth in agriculture fell to 1.7%, industry recovered to 2.6% growth, while growth in services slowed to 2.9%. On the demand side, net exports made the largest contribution to GDP growth as imports fell. After 2 years of contraction, consumption grew 2.1%. Inflation averaged 4.3% in 2019. The impact of the COVID-19 pandemic will limit GDP growth to 2.2% in 2020, with an expected recovery to 3.5% in 2021.  
    Source: Asian Development Outlook 2020, ADB

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  • Southeast Asia

    Brunei Darussalam

    GDP growth expanded by 3.9% in 2019 from 0.1% in 2018, with the dominant oil and gas industry growing by 4.7% after contracting 1.1% in 2018. The recovery coupled with new downstream production of petroleum and chemical products further boosted economic activity. On the demand side, private consumption saw its highest growth in 6 years, expanding by 5.9% in 2019 from 2.2% in 2018. Improved labor conditions as well as lower inflation encouraged household spending and is expected to support the country’s recovery in the near term. With the impact of COVID-19, the economy is forecast to grow a slower 2.0% in 2020 before bouncing back to 3.0% in 2021.
    Source: Asian Development Outlook 2020, ADB

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    Cambodia

    GDP growth slowed slightly to an estimated 7.1% in 2019 (from 7.5% in 2018). Garment manufacturing, construction, and tourism continued to expand. The current account deficit widened significantly from 12.2% of GDP in 2018 to an estimated 17.6% in 2019 as import growth outpaced exports. Growth is expected to slow dramatically to 2.3% in 2020 as a direct result of the COVID-19 outbreak—low growth in the People’s Republic of China, a contraction in major advanced economies, and reduced access to export markets. Growth is expected to rebound to 5.7% in 2021. The pandemic hit services hard by reducing tourist arrivals and is expected to hurt construction and manufacturing through supply chain disruptions and reduced demand.
    Source: Asian Development Outlook 2020, ADB

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    Indonesia

    GDP growth slowed to 5.0% in 2019 from 5.2% in 2018. On the demand side, sustained strong domestic consumption partially offset a worsening external environment (imports fell by 7.7% while exports shrank by 0.9%) and weakening domestic investment (fixed investment fell by 2.2%). On the supply side, growth in agriculture and industry slowed while services rose by 1.2 percentage points, remaining the biggest contributor to GDP growth. Inflation fell to 2.8%. The current account deficit narrowed to 2.9% of GDP. Given the impact from the COVID-19 pandemic, recent developments in commodity and financial markets, and conservative assumptions on risks, GDP is forecast to grow 2.5% in 2020, recovering to 5.0% in 2021. In 2020, both exports and imports are expected to contract; fixed investment will remain subdued; while inflation should remain within target. In 2021, with the expected recovery, exports will rise with investments in urban real estate and construction.
    Source: Asian Development Outlook 2020, ADB

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    Lao People’s Democratic Republic

    GDP growth fell to 5.0% in 2019 from 6.2% in 2018. A combination of floods and drought, and African swine flu slowed agricultural production, which comprises 15.5% of GDP. Industrial growth also slowed as hydroelectric power generation fell. Growth in services, however, rose slightly, to 7.2% in 2019 from 7.0%, from an increase in tourism. Higher food prices drove inflation to 3.3%. Export growth eased from 18.7% to 4.5% while import growth plunged to 0.5% due to the depreciation of the kip. The COVID-19 impact and general regional slowdown will limit GDP growth to 3.5% in 2020—even with an increase in hydroelectric power generation, public construction and recovery in agriculture. Growth should rise to 6.0% in 2021 as tourism, transport, trade, and related services revive.
    Source: Asian Development Outlook 2020, ADB

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    Malaysia

    The economy grew by 4.3% in 2019, its slowest in a decade, down from 4.7% in 2018. Despite decelerating slightly, growth in private consumption remained robust at 7.6%, offsetting sluggish growth in exports and domestic investment. Inflation remained muted at 0.7% even with strong consumption and some monetary policy easing—the central bank cut its policy rate from 3.25% to 3.00% in May. Export earnings declined by 4.3% due to weaker global growth, the trade tensions between the United States and the People’s Republic of China, and lower commodity prices. With the COVID-19 outbreak disrupting supply chains and travel, exports of goods and services are expected to continue to contract. GDP growth is thus expected to drop to 0.5% in 2020 before recovering to 5.5% in 2021.
    Source: Asian Development Outlook 2020, ADB

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    Myanmar

    Recovery in agriculture and industry pushed GDP growth up to 6.8% in FY2019 (ending September 2019) from 6.4% in FY2018. Inflation surged to 8.6% in FY2019 from 5.9%. Foreign direct investments (FDI) commitments expanded to $4.2 billion during the year, with manufacturing, transportation and telecommunications as key FDI sectors. The current account deficit narrowed to the equivalent of 3.5% of GDP in FY2019 from 3.7% in FY2018. Growth is forecast to slow to 4.2% in FY2020 given the impact of the COVID-19 pandemic but should rebound to 6.8% in 2021 assuming the virus is quickly contained. A general election in late 2020 could create uncertainty over economic policy and affect growth prospects.
    Source: Asian Development Outlook 2020, ADB

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    Philippines

    Economic growth moderated to 5.9% in 2019 from 6.2% in 2018, below its long-term trend of 6.3%. A delayed national budget resulted in a drop in public spending during the first half of 2019, but the economy ended on a high note with 6.4% year-on-year growth in Q4. On the demand side, private consumption contributed most to GDP; public spending caught up by Q3; and net exports grew. Investment plunged from 13.2% growth in 2018 to a 0.6% contraction in 2019. On the supply side, services contributed 70% of GDP growth with industry about 30%. Growth in agriculture remained modest at 1.5%. Inflation dropped by half to 2.5%. Tax revenue to GDP is at its highest ratio in two decades. The government debt-to-GDP ratio continued to fall. With the COVID-19 outbreak, growth is forecast to fall to 2.0% in 2020 before recovering to 6.5% in 2021.
    Source: Asian Development Outlook 2020, ADB

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    Singapore

    GDP growth decelerated to 0.7% in 2019 (the lowest in 10 years) from 3.4% in 2018. Weaker global demand and trade tensions between the United States and People’s Republic of China crimped exports, which contracted by 1.6%. On the demand side, private consumption moderated to 3.7%, government consumption growth edged down to 2.8%, and the contraction in domestic fixed investment slowed to 0.2%. In April 2018, the Monetary Authority of Singapore allowed the Singapore dollar to appreciate in nominal effective terms against the US dollar. The trade surplus expanded to 26.3% of GDP on strong services exports. With the impact of COVID-19—travel and supply chain disruptions—economic growth is expected to slow to 0.2% in 2020. With a sufficient fiscal buffer, fiscal policy will remain expansionary, with growth expected to improve to 2.0% in 2021.
    Source: Asian Development Outlook 2020, ADB

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    Thailand

    Slowing exports led GDP growth down to 2.4% in 2019 from 4.2% in 2018. Exports of goods and services contracted by 2.6% in 2019 after growing 3.0% in 2018, largely on the impact of slowing global trade tied to trade tensions between the United States and the People’s Republic of China. Tourist arrivals in Thailand reached 39.8 million in 2019, 4.2% higher than 2018. As growth slowed, so did inflation, to just 0.7%. The surplus in the overall balance of payments thus rose to $13.6 billion in 2019 from $7.3 billion. However, the economy is expected to contract by 4.8% in 2020 as the COVID-19 pandemic disrupts supply chains and tourism. GDP should recover to 2.5% growth in 2021 as transport and tourism gradually return.
    Source: Asian Development Outlook 2020, ADB

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    Timor-Leste *

    After contracting for 2 years, GDP (excluding the large offshore petroleum sector) grew by 3.4% in 2019. Much was due to fiscal stimulus—public spending expanded by 4.3%. Government consumption rebounded strongly, growing by 11.5% after contracting by 1.0% in 2018. Services grew a robust 5.4% in 2019, reversing a 2.6% contraction in 2018. This cushioned the decline in both industry and agriculture. Still, political uncertainty continues to weigh on government activity, especially given the suppressed domestic demand due to the COVID-19 pandemic. The economy may contract by 2.0% in 2020, recovering to 4.0% growth in 2021 on moderate fiscal stimulus and revived private investment.
    Source: Asian Development Outlook 2020, ADB

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    Viet Nam

    The economy recorded another stellar year, with growth slipping marginally to 7.0% in 2019 from the record 7.1% growth in 2018. The expansion was underpinned by strong domestic demand, resilient manufacturing, and solid foreign direct investment. Inflation eased to a 3-year low, averaging 2.8% in 2019, but it is projected to rise moderately in 2020 and 2021. The current account surplus expanded to an estimated 5.0% equivalent of GDP from 2.4% in 2018, supported by a large trade surplus and stable remittances. The impact of the COVID-19 and the abrupt global slowdown will slash growth to 4.8% in 2020, before returning to robust growth in 2021.
    Source: Asian Development Outlook 2020, ADB

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    * part of Southeast Asia beginning 1 October 2019

  • The Pacific

    Cook Islands

    Economic growth dropped to 5.3% in FY2019 from 8.9% in FY2018, largely from a 20% fall in public spending on infrastructure. However, services, mainly tourism and retail services, continued to grow, contributing 4.1 percentage points to GDP growth. Inflation rose to 0.8% due to high import demand in support of tourism. The fiscal surplus expanded as revenue rose while government infrastructure spending declined. Net debt at end-June 2019 was below target at 17.3% of GDP. The current account remained in surplus as tourism receipts outpaced the rise in imports. With the collapse in tourism as the COVID-19 outbreak intensified, economic activity will contract by 2.2% in 2020. Growth in FY2021 is projected at 1.0% as the government continues to implement its economic recovery plan.
    Source: Asian Development Outlook 2020, ADB

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    Fiji Islands

    Economic growth is estimated to have fallen to 0.7% in 2019 from 3.5% in 2018. Slower growth among major trading partner economies cut growth in visitor arrivals to 2.8%, the lowest since 2013. Growth in tourism earnings slowed to 2.7% from 4.5% in 2018. A tighter government budget and slower growth in private sector credit also contributed to the GDP growth slowdown. Sugarcane production accelerated to 6.5% in 2019 from 4.0% in 2018 and sugar production grew by 5.3%, reversing the 11.2% decline in 2018. The fiscal deficit narrowed to 3.4% of GDP while monetary policy remained accommodative in response to weak demand. GDP is projected to contract by 4.9% in 2020 as the COVID-19 pandemic continues to ban most travel. Investment in climate resilient infrastructure, limits on debt exposure and building fiscal buffers could help growth recover to 3.0% in 2021.
    Source: Asian Development Outlook 2020, ADB

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    Kiribati

    GDP continued to grow by 2.4% in 2019, slightly higher than the 2.3% growth in 2018. Government spending on wages and subsidies reversed the country’s fiscal surplus—estimated at 27.2% of GDP—into an 8.0% deficit. Lower prices of food, beverages, and tobacco led to a 1.8% deflation in 2019, while the country’s current account surplus narrowed from roughly 13.4% of GDP to 7.6%. As the country does not rely heavily on tourism, the economy will be less affected by COVID-19 travel restrictions. However, the impact may slow construction on some projects. In addition, general elections slowed approval of the 2020 budget, which may drag down economic activity. GDP growth is estimated to decelerate to 1.6% in 2020, rising to 1.8% in 2021.
    Source: Asian Development Outlook 2020, ADB

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    Marshall Islands

    Economic growth remained stable at 3.6% in FY2019 on higher construction, fishing, and public administration. Agriculture expanded for a third consecutive year and the fish catch rebounded, resulting in double-digit growth in exports to Japan and Taipei,China. The fiscal surplus rose to 3.0% of GDP in 2019 from 2.5% in 2018. Government debt fell from 70.0% of GDP in FY2009 to 35.0% in FY2018. Inflation eased to 0.1% in 2019 from 0.8% in 2018. Growth is projected to decelerate to 2.5% in FY2020 as travel and transport restrictions caused by the COVID-19 pandemic depress growth in construction, agriculture, fishing, and trade. Growth is expected to rebound to 3.7% in FY2021 as restrictions are gradually eased.
    Source: Asian Development Outlook 2020, ADB

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    Micronesia, Federated States of

    GDP growth recovered to 3.0% in FY2019 on increased public investment and private sector activity following severe flooding in FY2018. Fishing license revenues remained high for the third consecutive year—at over $70 million accounting for 17.0% of GDP. Moreover, corporate income taxes from foreign insurance and investment companies bolstered the FSM Trust Fund, including $43 million contributed during the year and $12 million in investment returns. Economic growth is projected to slow to 1.6% in FY2020 as election-related stimulus wanes and construction delays affect ongoing projects because of restricted mobility for labor and imported capital equipment as a result of the COVID-19 pandemic. Resuming work on these projects should support higher growth in FY2021.
    Source: Asian Development Outlook 2020, ADB

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    Nauru

    The economy significantly slowed to 1.0% in FY2019 from a re-estimated 5.7% growth in FY2018 as activity slowed at the Regional Processing Centre (RPC), an Australian-funded facility for asylum seekers, and phosphate output declined. The fiscal surplus narrowed to 16.0% of GDP in FY2019 despite a 44.8% increase in fishing license revenue and higher revenues from the RPC. Economic growth is expected to slip further to 0.4% in FY2020 but recover to 1.1% in FY2021. Phosphate exports are expected to remain weak while RPC activity moderates further. The travel and trade disruption due to the COVID-19 pandemic will also contribute to the decline. Construction on a new seaport is expected to provide additional benefits to local services.
    Source: Asian Development Outlook 2020, ADB

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    Niue

    GDP growth accelerated to 6.5% in 2018 as government spending helped resume development partner-supported capital projects after several years of stagnation. The robust economic activity led to sharply higher inflation in 2018, especially for alcoholic beverages and transportation. Fiscal stimulus has remained substantial despite a slight slowdown in 2019. Consequently, economic growth is estimated to have slowed in 2019, following some moderation in the growth of visitor arrivals. The outlook for 2020 and 2021 will continue to depend heavily on tourism and the pace of infrastructure construction.
    Source: Asian Development Outlook 2020, ADB

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    Palau

    The economy contracted 3.1% in FY2019 as visitor arrivals declined by 22.6%. The political unrest in Hong Kong, China along with restrictive travel measures in the People’s Republic of China and Macau, China cut visitor arrivals by almost half. Arrivals from Japan, Palau’s second biggest market since 2014, also fell by almost 20.0%. The decline was partially offset by a 23.9% increase in arrivals from Taipei,China. Infrastructure projects funded by development partners helped limit the economic contraction. Palau’s economy is forecast to contract by 4.5% in FY2020 from the impact of COVID-19 related travel bans, recovering to 1.2% in FY2021, as travel restrictions are gradually lifted.
    Source: Asian Development Outlook 2020, ADB

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    Papua New Guinea

    GDP grew 4.8% in 2019, following a 0.8% contraction in 2018, largely due to rebounding petroleum and mineral production. The current account posted a significant surplus again in 2019, driven by increased liquefied natural gas and gold exports, as well as a rising gold price. But political maneuvering and the deferral of large investment projects affected sentiment. Gas production could fall in 2020 on reduced demand from the People’s Republic of China due to the COVID-19 pandemic. Inflation dropped to an estimated 3.6% in 2019, yet an overvalued kina and associated foreign exchange shortage continued to hold back economic activity. As the fiscal balance worsens, the government faces important challenges in managing public debt.
    Source: Asian Development Outlook 2020, ADB

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    Samoa

    The economy rebounded to 3.5% growth in FY2019 with large gains in general commerce and smaller contributions from construction, food and beverage manufacturing, hotels, and restaurants. Visitor arrivals had another strong year, growing by 9.3%. The economy is expected to contract by 3.0% in FY2020 from the combined impact of a measles outbreak and COVID-19 on tourism. FY2021 will be similarly affected, with GDP expected to grow by only 0.8% as tourism recovers only slowly, but with positive contributions from communications and agriculture.
    Source: Asian Development Outlook 2020, ADB

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    Solomon Islands

    Economic growth is estimated to have declined sharply to 2.6% in 2019 from 3.9% in 2018 on reduced logging and weaker construction. Major crops such as palm oil, copra, and coconut oil were down. Growth in the fish catch slowed to 8.0% in 2019 from 27.0% in 2018. Industry also subtracted from growth in 2019 as construction slowed. A drop in public investment also contributed to weakened economic growth. GDP in 2020 is forecast to grow by 1.5% given the trade and travel disruptions caused by the COVID-19 pandemic. GDP growth should rebound to 2.7% in 2021 with major new infrastructure projects planned.
    Source: Asian Development Outlook 2020, ADB

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    Tonga

    Continued rehabilitation and recovery from Cyclone Gita boosted economic growth to 3.0% in 2019 from 0.2% in 2018. Stronger consumption contributed on the demand side despite delays in the rollout of major construction projects. On the supply side, growth in fishing and agriculture were weak, but services, centered on tourism, remained robust. Inflation slowed to 4.1% from 7.0%; the fiscal surplus narrowed; and external debt fell to 34.1% of GDP. The current account deficit equaled 6.8% of GDP in 2019, mainly due to a 15.7% rise in the merchandise trade deficit. Pandemic-related transport and travel restrictions will leave zero GDP growth in 2020. But the gradual recovery in tourism and faster post-cyclone reconstruction will boost economic growth to 2.5% in 2021.
    Source: Asian Development Outlook 2020, ADB

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    Tuvalu

    GDP growth nearly matched 2018 growth, expanding by 4.1% in 2019. Increased capital spending connected with the Pacific Islands Forum meeting in August provided a boost. Higher spending and a steep decline in fishing receipts led to a fiscal deficit in 2019 equal to 9.8% of GDP, reversing a 34.2% surplus in 2018. Inflation in 2019 rose to 3.3%. Growth in 2020 will be affected by the impact of Cyclone Tino, which struck in January 2020, and the COVID-19 pandemic, which disrupted construction. Cyclone rehabilitation will be helped by support from multilateral organizations, but construction may be stymied by the pandemic impact. Still, growth is forecast at 2.7% in 2020 and 3.2% in 2021.
    Source: Asian Development Outlook 2020, ADB

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    Vanuatu

    Economic growth was unchanged at 2.8% in 2019. The decline in tourism growth, alongside slowed construction and a drop in imports was offset by a sharp rise in recurrent public expenditures from 3% in 2018 to 15% in 2019. The fiscal surplus, however, narrowed to 6.7% as expenditures outpaced revenues. Nonetheless, the honorary citizenship programs and value-added tax provided needed revenue in 2019. Travel restrictions and the global economic slowdown from the COVID-19 pandemic will derail tourism in 2020 and hamper construction on those infrastructure projects that rely on imports and foreign labor. The economy is forecast to contract 1% in 2020 before recovering to 2.5% growth in 2021.
    Source: Asian Development Outlook 2020, ADB

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