Developing Asia to recover strongly, but COVID-19 risks remain: ADB

Karen Lema, Reuters

Posted at Apr 28 2021 08:45 AM

Developing Asia to recover strongly, but COVID-19 risks remain: ADB 1
The facade of the Asian Development Bank headquarters in Ortigas on August 25, 2020. Mark Demayo, ABS-CBN News/File

MANILA - Developing Asia's economic rebound this year could be stronger than previously thought, the Asian Development Bank said on Wednesday, underpinned by expectations of a solid global recovery and progress on vaccines.

But the Manila-based lender was quick to caution that risks to its forecasts were skewed more to the downside because new outbreaks and delays in vaccine rollout could prolong disruptions to mobility and stall regional economic activity.

Developing Asia, which groups 45 countries in the Asia-Pacific, is forecast to grow 7.3 percent in 2021, the ADB said in its Asian Development Outlook report, stronger than its previous estimate of 6.8 percent and follows a 0.2 percent contraction last year. 

For 2022, the region is projected to grow 5.3 percent.
 
"Growth is gaining momentum across developing Asia, but renewed COVID-19 outbreaks show the pandemic is still a threat," said Yasuyuki Sawada, ADB chief economist, said in the report. 

Geopolitical tensions, political turmoil, production bottlenecks, financial turmoil and long-term scarring effects of learning losses from school closures due to the pandemic also threaten recovery, Sawada said in a separate briefing. 

Asia accounts for more than 16 percent of the global case load of 147.9 million coronavirus infections, according to a Reuters tally. With more than 319,000 deaths, the region accounts for 9.8 percent of the global COVID-19 toll.

As some economies continue to struggle to contain the virus and its new variants, the ADB said the recovery would be uneven.
 
China's economic rebound from a pandemic-induced slump is forecast to be the strongest this year, with growth seen at 8.1 percent, driven by strong domestic demand and exports, before moderating to 5.5 percent in 2022, the ADB said.
 
By region, South Asia will record the fastest economic recovery this year, with the ADB predicting an expansion of 9.5 percent
after a 6.0 percent contraction in 2020, buoyed by India's economic
revival. 
 
Even as the coronavirus crisis in India remained grim, Sawada said ADB's 11.0 percent growth forecast for the South Asian
country this year, which follows an 8.0 percent slump in 2020, is "achievable at this stage". 

"India's vaccine rollout is going well," Sawada said putting it on course to vaccinate 300 million by August and achieve herd immunity by 2022. 

India leads the world in the daily average number of new infections reported, accounting for one in every 3 infections reported worldwide each day, according to a Reuters tally.

Southeast Asia's 2021 growth forecast was trimmed to 4.4 percent from a previous estimate of 5.5 percent, dragged down by a projected 9.8 percent decline in Myanmar's economic output, which was hit hard by mass protests, strikes and sanctions following a military coup on Feb. 1. 

Easing food price pressures should slow inflation to 2.3 percent this year, from 2.8 percent last year, but it is predicted to quicken
to 2.7 percent in 2022.

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