Developing countries in Asia face first recession in over 60 years due to COVID-19

In Asia, the first signs of an economic slump are starting to show. According to a report by the Asia Development Bank, the economies of developing Asia, which consists of 45 nations from China to Georgia, will experience a recession for the first time in over 60 years.

Priyanka Chakraborty, visiting assistant professor of economics, explained that economic upswings and downswings are normal and to be expected, but prolonged abnormal activity can be worrying.

“When the downswing is extended beyond say, a couple of months, maybe three months . . . and we are not recovering as quickly as we would like under normal circumstances, that’s when we start to get worried and that’s when we fear we may be entering a recession,” Chakraborty said.

For many, the word “recession” brings to mind the 2008 global financial crisis or even the dot-com bubble of the early 2000s, when economic hardship was brought about through failures in the financial sector. However, Chakraborty sees the current situation as a far more novel and complex problem rooted in part outside of banks and fiscal policy.

“The global economy has never seen a recession due to a pandemic before,” Chakraborty said. “It’s a medical crisis, so it is a completely different game. We’re still trying to learn the rules of the game as well as play the game and win the game.”

Chakraborty also pointed out that the economies in question are still developing, making their performance far more impactful on the lives of their populations.

“These growth numbers translate into very real living outcomes for the people,” Chakraborty said. “That’s why it’s definitely even more worrying for emerging economies.”

China stands as a notable exception to the regional recession, which the ADB’s summary of its report attributes to the country’s swift response to the COVID-19 crisis. Since the virus’s first peak in February, the country of almost 1.5 billion has not seen more than 500 new cases a day, according to Johns Hopkins University, and the ADB noted in a summary of the report that, “After containing its domestic outbreak relatively rapidly, the People’s Republic of China saw growth recover from 6.8% contraction in the first quarter to 3.2% growth in the second.”

Unlike China, India — another regional powerhouse — is facing much bigger economic shortfalls.

“The principal issue is (India has) a huge population, and (India has) not dealt with a crisis like this before,” Chakraborty said. “Because of (India’s) lockdown measures, we’ve had huge amounts of job loss. Millions of people, both in the formal sector and in the agricultural (and) informal sector, have really suffered in India. It’s particularly worrisome because compounding these problems is (the fact that) right now, after the United States, India is on top of the rising number of cases.”

Japan, the world’s third-largest economy behind China and the United States, was facing economic uncertainty even before the pandemic hit, according to Chakraborty.

“The problem with Japan has been a very unusual case of deflation,” Chakraborty said. “Usually we worry about inflation because prices are rising too much. But Japan, for a long time, has been struggling with the opposite problem which is deflation, which means prices are not rising at all.”

Three weeks ago, Japan’s Prime Minister, Shinzo Abe, resigned due to health concerns. Though his successor, Yoshihide Suga, has promised to continue Abe’s policies and complete his goals, Chakraborty sees the development as further cause for concern.

“For Japan that’s a big worry — what’s going to happen?” she said. “Is there going to be a policy paralysis with the change in leadership? What is the new leadership going to look like, especially under this (COVID-19) condition?”

South Korea is being examined as an example for how to thread the needle between virus control and economic health. Despite an August spike in cases, the country has averaged just under eight deaths per million, according to data from Johns Hopkins and the World Population Review. By comparison, the United States is currently at around 620 deaths per million. According to an article on, this success against the virus has translated to economic success. Where Morgan Stanley predicts the U.S. economy will contract by just over 3.5%, the ADB forecasts that South Korea’s GDP will shrink by one percent.

Because South Korea responded so well to initial outbreaks of the virus, day-to-day activities were minimally impacted. According to Google mobility data, people continued to travel to work, shop and play. Additionally, South Korea announced its fourth economic stimulus package last month, adding around $6.5 billion to its economy.

Despite its individual success, South Korea is still heavily influenced by the global economy.

“Korea depends a lot on international trade,” Lee Doowon, an economist at Yonsei University in Seoul, said in an interview with “And because of this pandemic, global trade has shrunk and that has a negative impact on the Korean export industry. Unless we make a serious breakthrough in the near future, this situation will be even worse in the coming several months.”

The ADB’s report projects that in 2021, developing Asia will grow by almost 7%. That level of growth would still leave GDPs behind pre-COVID-19 levels, but is a hopeful sign amidst the current economic uncertainty.