THE growth slowdown in emerging Asia is significant and recovery will face challenges through 2021, but the pandemic has accelerated the Fourth Industrial Revolution, said the latest report by the OECD Development Centre released on Thursday.

Emerging Asian countries - members of the Association of Southeast Asian Nations (ASEAN), China and India - will see their real Gross Domestic Product (GDP) rebound by 7.4 per cent in 2021 after declining by an average 1.7 per cent in 2020, said the Organisation for Economic Cooperation and Development (OECD).

In ASEAN, average real GDP is projected to grow by 5.1 per cent in 2021 after contracting by 3.4 per cent in the previous fiscal, said the latest "Economic Outlook for Southeast Asia, China and India 2021: Reallocating resources for digitalisation" report.

The economic fallout in 2020 is especially pronounced in India which saw its GDP fall 9.9 per cent and the Philippines with negative 9 per cent. On the other end, Vietnam will post the strongest output growth rate in the region in 2020, forecast at 2.6 per cent.

The anticipated near-term rebound stems from improvements in financial conditions as well as from the significant monetary and fiscal policy measures put in place by governments.

However, labour-market conditions will remain weak while the contribution of the external sector to the recovery is jeopardised by an uncertain global economic situation, thereby restraining demand and investment. Public and private debt levels are also expected to rise.

"Moreover, if the quality of assets in the banking sector deteriorates, banks may not be able to provide sufficient support to the recovery. Finally, inflationary pressures should remain low due to the ongoing slack in the economy," it added.

Each country's pandemic management strategies and their ability to maintain policy support will shape the 2021 recovery, the report stated.

"Countries with superior pandemic management, including the distribution of COVID-19 vaccines, will fare better. When concerns about the virus recede, continued policy support to households and businesses will facilitate a faster rebound," it surmised.

The organisation advised that policymakers in emerging Asia will have to devote attention to improving monetary policy transmission and increasing fiscal policy effectiveness.

Finally, the organisation said, the pandemic has accelerated Industry 4.0 as technologies have allowed firms to stay responsive to market needs.

Several countries in emerging Asia have taken decisive steps to support digitalisation during the pandemic, most commonly by providing incentives for firms to encourage e-commerce and the digitisation of operations and trade channels.

"Varying levels of readiness and differing economic structures influence countries' capacities to adopt Industry 4.0 technologies," noted the report.

The most frequently cited bottlenecks to the growth of industry include lack of adequate infrastructure and awareness, as well as financial limitations, notably for smaller firms, it added.