Asian Development Outlook 2021: ADB

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    Recently, Asian Development Bank has released its flagship Asian Development Outlook (ADO) 2021. 

    About

    • Asian Development Outlook (ADO) is a series of annual economic reports on the Developing Member Countries (DMCs) of the Asian Development Bank (ADB).
    • An uncertain pandemic trajectory with a prolonged second wave of Coronavirus pandemic despite the vaccination push can affect India’s economic normalization.
    • The forecast by ADB, expects the economic impact of the second wave to be relatively low compared to the first wave in line with the global experience.

    Major Highlights

    • Growth Projection
    • India: It projects India’s gross domestic product (GDP) will rebound strongly by 11.0% in fiscal year (FY) 2021-22 due to continued economic recovery boosted by increased public investment, vaccine rollout, and a surge in domestic demand.
      • It forecasts India’s economic growth to moderate to 7.0% in FY2022.
      • The economy is expected to have contracted by 8.0% in FY2020 in line with the government’s second advance estimate.

    • Developing Asia: The gross domestic product (GDP) of South Asia is expected to rebound to 9.5% this year, following a contraction of 6% in 2020, before moderating to 6.6% next year (2022).
      • The region’s growth is forecast to moderate to 5.3% in 2022 and most economies in developing Asia will see healthy growth this year and in 2022. 
      • Excluding the newly industrialized economies of Hong Kong, China; the Republic of Korea; Singapore; and Taipei, China, developing Asia’s economic activity is expected to grow 7.7% this year and 5.6% in 2022.
      • China’s gross domestic product (GDP) is forecast to expand 8.1% in 2021 and 5.5% in 2022. 
      • Developing Asia comprises 46 members of ADB list on the basis of geographic group.
        • India is also part of Developing Asia.

     

    • Challenges Faced by the Asian Economies
    • Increasing Geopolitical tensions.
    • Financial turmoil from tightening financial conditions.
    • Production bottlenecks.
    • Long term scarring. This includes learning losses due to school closures.
    • Learning and Earning Losses from COVID-19 School Closures
    • The COVID-19 pandemic severely disrupted education. Schools were closed to varying degrees across developing Asia. 
    • Though, remote learning strategies were deployed in most economies to keep students learning. But many students are constrained by access to resources like computers and the internet. 
    • Students in developing Asia have lost 29% of a year of learning on average.
    • Estimates show that students affected by school closures stand to lose an average of $180 or a 2.4% decline in expected annual earnings.
    • Indian Analysis Favouring Economic Growth
    • Increased expenditure by the Indian Government on water, health care, and sanitation will strengthen the nation’s resilience against future pandemics.
    • Private investment has been expected to pick up as well as the accommodative credit conditions.
    • A faster vaccine rollout will help in increasing the urban demand or the services while the rural demand will be boosted by the government’s support to farmers and agricultural growth.
    • The agricultural sector will be further boosted by the forecast of a normal monsoon and the bumper harvest of the summer crops.
    • Push to the manufacturing sector by the Indian Government through the production-linked incentive scheme will further expand domestic production ang global supply chains.
    • Policies to Minimize Learning and Earning Losses
    • Continue strengthening information and communication technology infrastructure. Heavy connectivity use during the COVID-19 pandemic has tested the limits of these networks in several countries.
    • Continue to use diverse modalities to provide accessible learning experiences for students in remote areas. Where online learning is not possible, these modalities can include television, radio courses, and paper-based learning.
    • Continue to provide devices for children from disadvantaged backgrounds
    • Provide systematic training on digital literacy for students and parents, and effective remote pedagogy for Teachers.
    • Develop and maintain a feedback loop between developers and administrators of remote learning platforms.
    • Encourage social interaction between students, teachers, and parents within the remote learning environment.

    Gross Domestic Product (GDP)

    • It is the money value of all goods and services produced in the domestic territory  of a country in an accounting year.
    • It can be calculated in three ways, using expenditures, production, or incomes. It can be adjusted for inflation and population to provide deeper insights.
    • GDP is equal to C + I + G + (X – M) where components of GDP include personal consumption expenditures (C), business investments (I), government spending (G), exports (X), and imports (M). 

    Asian Development Bank (ADB)

    • About: It is a regional development bank established on 19th December 1966.The ADB was modeled closely on the World Bank.
    • Headquarters: Manila, Philippines.
    • Members: 68 members, 49 from within Asia.
      • Japan holds the largest proportion of shares in ADB followed by the USA, because Japan is one of the largest shareholders of the bank, the president has always been Japanese.
      • ADB is an official United Nations Observer.
    • Aim: To promote social and economic development in Asia.
      • It is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty.

    Source: TH