- Region has bounced back from 2020 but speed of recovery will be different among countries
- China is projected to grow 8.5% this year, supported by buoyant exports and the relief of pent-up demand
- In ASEAN , only Vietnam has seen output surpassing pre-pandemic levels and is projected to expand 6.6% on average this year and next
- Downside risks predominate including the possibility of repeated and large COVID-19 outbreaks amid delayed vaccinations
The economy of East Asia and the Pacific has bounced back from 2020, projected to grow 7.7% in 2021 on a strong Chinese rebound while the rest of the region grows more slowly amid continued pandemic-related challenges, according to a new World Bank report.
The financial institution’s June 2021 Global Economic Prospects has forecast different speeds of recovery for countries in the region. Of the three largest economies China, Indonesia, and Thailand, only China has seen its output surpass pre-pandemic levels.
Output in two-thirds of the region’s economies is expected to remain below pre-pandemic levels until 2022. Clouding the outlook, COVID-19 caseloads are expected to remain elevated in several regional economies. The strength of recovery will depend on the ability of major regional economies to fulfill their vaccine commitments.
Growth in China is projected to pick up to 8.5% this year, supported by buoyant exports and the relief of pent-up demand amid effective control of the outbreak, before moderating to 5.4% in 2022.
The World Bank projects output in the region excluding China to grow 4.0% in 2021 in the face of continued pandemic-related headwinds and delayed recovery of tourism and travel, then accelerate to 5% in 2022 as the economic recovery takes hold.
Despite the recovery, global output will be about 2% below pre-pandemic projections by the end of this year, said the report released June 8. Per capita income losses will not be unwound by 2022 for about two-thirds of emerging market and developing economies.
Among the ASEAN economies, only Vietnam has seen output surpassing pre-pandemic levels and is projected to expand 6.6% on average this year and next.
Indonesia, which initially suffered relatively shallow output contraction, has been experiencing a more gradual recovery. Growth is expected to rebound to 4.4% in 2021 and strengthen further to 5% in 2022, although many jobs in low-value-added services may be slow to return.
In the Philippines, extended periods of strict lockdowns in response to a severe COVID-19 outbreak and natural disasters have kept output at 8% below the country’s pre-pandemic level. The economy is expected to grow at 4.7% in 2021 and 5.9% in 2022.
Thailand is predicted to see growth pick up to 2.2% in 2021 and 5.1% in 2022, helped by a recovery in tourism and travel. Malaysia is expected to rebound to 6% in 2021 and to moderate to 4.2% in 2022.
Among the smaller economies, the recovery is expected to be particularly weak as tourism is expected to remain below pre-pandemic levels until at least 2023.
Downside risks to the outlook predominate, said the World Bank. These include the possibility of repeated and large COVID-19 outbreaks amid delayed vaccinations; heightened financial stress amplified by elevated debt levels; and the possibility of more severe and longer-lasting effects from the pandemic, including subdued investment and eroded human capital.
Disruptions from natural disasters are a constant source of severe downside risk for many countries, especially island economies.
On the upside, risks include accelerated vaccination rollouts and greater-than-expected spillovers from recoveries in the United States and other major economies.