The Asian Development Bank has revised its 2021 growth outlook for the region down slightly to 7.0%, from the 7.1% it had pencilled in September.
The regional development bank has also lowered its growth figure for next year to 5.3%, from 5.4%.
This follows the renewed outbreaks of coronavirus infections which have led to slower growth in 3Q2021, ADB noted on Dec 14.
“New outbreaks in the third quarter muted gross domestic product growth, and the advent of the Omicron virus variant is causing renewed uncertainty. Recovery efforts will have to take these developments into consideration,” notes ADB’s acting chief economist, Joseph Zveglich.
In this time, subregional growth in Asean slowed modestly in 3Q2021, amid tighter mobility restrictions in 3Q2021 to curb the spread of the “highly transmissible Delta coronavirus variant,” ADB’s report highlights.
As such it revised Asean’s outlook down by 0.1 percentage points to 3.0% as economies in the subregion imposed targeted restrictions in the face of Covid-19’s Delta variant.
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Specifically, the bank has downgraded its 2021 growth forecasts for Malaysia (to 3.8%, from 4.7% in September) and Vietnam (to 2.0% from 3.8% previously) after their 3Q2021 performance left a “pessimistic outlook” for the rest of the year.
Conversely, ADB points out that the economic performance for the Philippines, Thailand and Singapore improved, following an upside in their 3Q2021 figures.
ADB is thus raising its 2021 growth forecast for the Philippines (5.1%), Thailand (1.0% from 0.8% previously).
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The bank has also revised its 2021 growth forecast for Singapore to 6.9%, from 6.5% - in line with official estimates which put this year’s expansion at 6% and 7%.
The revision follows the republic’s “robust” 7.1% growth in 3Q2021. This followed an expansion in manufacturing, construction and services as border controls eased and domestic activity picked up.
ADB expects Singapore to post “solid recovery in line with an improved global economy as well as the government’s effective efforts to manage Covid-19 and revive the economy”.
For next year, ADB is maintaining its growth forecast for the city-state at 4.1%.
Overall, the Asean region is forecast to grow at 5.1% as economies are expected to continue easing overall restrictions and reviving economic activities.
Meanwhile, East Asia’s growth outlook has been downgraded by 0.1 percentage points for both 2021 and 2022, to 7.5% and 5.0%, respectively, amid slight downward adjustments in the forecasts for the People’s Republic of China (PRC)—the subregion’s largest economy.
Conversely, central Asia – which comprises of Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan – is slated to grow at 4.7% this year, following higher commodity prices and increased public spending. The subregion is expected to grow by 4.4% next year.
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In the same regard, South Asia is forecast to grow 8.6% in 2021, compared with September’s forecast of 8.8%. The subregion’s 2022 outlook remains at 7.0%.
Estimates from ADB put regional inflation at 2.1% in 2021 and 2.7% in 2022. This allows for a more accommodative monetary policy as well as measures supporting pandemic recovery, it explains.
Looking ahead, the main risk to the Asia’s growth remains a resurgence in Covid-19 infections.
The good news is that developing Asia’s vaccination rate has increased significantly to 48.7% (fully vaccinated) as of Nov 30, although the region still lags behind the United States at 58.1% and the European Union at 67.2%.
Rates of fully vaccinated people also vary widely within the region, from as high as 91.9% of the total population in Singapore to as low as 2.2% in Papua New Guinea.
Cover image: file photo
