The update of the ADB's outlook estimates the regional economy will contract 0.7% this year, recovering to 6.8% growth in 2021.
Conditions could deteriorate further, however, if the coronavirus pandemic worsens significantly, the regional lender said. The update downgrades growth estimates for many countries in the region, where outbreaks of coronavirus have surged in some countries, such as the Philippines and Indonesia.
The report said that China, where the pandemic began, has already begun to recover and will see its economy grow 1.8% this year and 7.7% in 2021. The 6.1% growth for China's economy in 2019 was the slowest pace in decades.
Asia's status as a production base for many medical products, digital devices and optical equipment helped to cushion the blow to trade from the pandemic downturn, the report noted.
Nonetheless, the downturn is the worst since the early 1960s, the report said.
"This has set back efforts to life hundreds of millions of people in our region out of poverty," said the ADB's chief economist, Yasuyuki Sawada.
Governments in many countries have imposed border controls, lockdowns and other restrictions to stem the spread of the coronavirus and prevent more outbreaks. But such measures come at a huge economic cost.
To help compensate, regional governments have promised $3.6 trillion, equivalent to about 15% of regional economic activity, in subsidies, loans and other support for individuals and businesses.
But small companies that account for most business in the region are short of capital to weather the crisis, the ADB said. It expects a recovery to be "L-shaped," or "swoosh-shaped" rather than V-shaped.
Even with a recovery, economies will be "substantially below expectations before COVID-19," Sawada said.
A prolonged pandemic could put countries into debt crises or destabilize their financial markets, the report said.
"Another risk would be worsening geopolitical tensions, most notably potential for US–PRC (China) friction over trade and technology to intensify," it said.
South and Southeast Asian countries have seen some of the worst devastation from the pandemic, with Malaysia, the Philippines, Singapore and Thailand logging double-digit contractions in the April-June quarter from a year earlier. All of their economies are expected to shrink by 5% or more this year.
Strong government spending will be crucial to support their recoveries, the report said.
The ADB said that ensuring health systems are improved is also vital for sustained growth.
"Physical and mental wellness has taken a battering during the crisis," said Donghyung Park, an ADB economist said. "A sound mind and a sound body, of course that's the first step to rebuilding the economy and the society."