ADB lowers Asia’s 2021 growth forecast amid renewed outbreaks

ADB lowers Asia’s 2021 growth forecast amid renewed outbreaks

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  • Growth projection for developing Asia is revised down slightly to 7.2% for 2021 following renewed virus outbreaks
  • East Asia will see higher growth of 7.5%, reflecting a strong first quarter
  • In South Asia, new waves of infections prompt a lower growth forecast of 8.9% for 2021
  • Southeast Asian growth is downgraded from 4.4% to 4.0% in 2021 as some countries reimpose pandemic restrictions

Recovery is underway in developing Asia in 2021, but the growth projection has been revised down slightly to 7.2% from 7.3% in April following renewed virus outbreaks in some economies, according to a new report from the Asian Development Bank (ADB).

The growth outlook for 2022 is upgraded to 5.4% from 5.3%, ADB said in its new supplement to the Asian Development Outlook (ADO) 2021, its flagship economic publication released last April. The supplement, issued July 20, provides updated projections for the region’s economies amid the COVID-19 pandemic.

Excluding the newly industrialized economies of Hong Kong, Republic of Korea, Singapore, and Taiwan, developing Asia’s updated growth outlook is 7.5% for 2021 and 5.7% for 2022 compared with earlier projections of 7.7% and 5.6%, respectively.

“Asia and the Pacific’s recovery from the COVID-19 pandemic continues, although the path remains precarious amid renewed outbreaks, new virus variants, and an uneven vaccine rollout,” said ADB chief economist Yasuyuki Sawada.

The COVID-19 pandemic remains the biggest risk to the outlook, as outbreaks continue in many economies. Daily confirmed cases in the region peaked at about 434,000 in mid-May. They narrowed to about 109,000 at the end of June, concentrated mainly in South Asia, Southeast Asia, and the Pacific.

Meanwhile, the vaccine rollout is gaining pace but developing Asia is still far from achieving herd immunity. As of the end of June, 41.6 doses have been administered per 100 people—above the global average of 39.2, but below rates of 97.6 in the United States and 81.8 in the European Union.

By subregion, East Asia’s growth outlook for 2021 is raised to 7.5%, up slightly from 7.4% in April, amid a stronger-than-expected recovery by the newly industrialized economies of Hong Kong, South Korea, and Taiwan. The subregional growth forecast for 2022 is retained at 5.1%. The growth outlook for China is likewise maintained at 8.1% this year and 5.5% in 2022, amid steady performances by industry, exports, and services.

The forecast for Central Asia has been raised to 3.6% from 3.4%, mainly due to an improved outlook for Armenia, Georgia, and Kazakhstan—the subregion’s largest economy. Central Asia’s outlook for 2022 remains at 4.0%.

Projections for South Asia, Southeast Asia, and the Pacific for 2021 are lowered as renewed outbreaks are met with containment measures and restrictions, hampering economic activity.

South Asia’s growth outlook is lowered to 8.9% from 9.5%, with the forecast for India downgraded by 1.0 percentage point to 10.0%.

Southeast Asia’s 2021 outlook is revised to 4.0% from 4.4%, while the projection for Pacific economies is lowered to 0.3% from 1.4%.

However, the 2022 growth forecasts for these subregions are upgraded to 7.0%, 5.2%, and 4.0%, respectively.

Photo by Jacek Dylag on Unsplash

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