MANILA - Fitch Solutions lowered its growth outlook for Asia’s emerging economies on Monday citing the fresh disruptions caused by COVID-19’s Delta variant.
The analytics firm also said slow vaccination efforts in the Philippines and several other countries mean that further outbreaks may happen and “and the outlook for the region reopening in a meaningful way this year is remote.”
Fitch Solutions said it expects emerging Asia to grow by 7.8 percent this year, down from an earlier 7.9 forecast.
It noted that most Asian economies emerged out of recession and posted strong growth in the second quarter, but the region's recovery has been constrained by low vaccination rates and the emergence of the more transmissible Delta virus variant.
“Asia is once again the epicenter of the pandemic with countries like Indonesia, Philippines, Thailand and Malaysia facing severe domestic health crises,” Fitch said.
It also noted that vaccinations in India, Indonesia and the Philippines are still lagging “considerably” at just 9.8 percent, 12.2 percent and 16.7 percent of their target respectively, as of August 27.
Recovery prospects in 2022 are also clouded by potential fiscal and monetary tightening, especially with the United States Federal Reserve expected to unwind its stimulus measures.
“Tighter monetary policy will take away a key crutch of cheap credit from markets that are still facing high unemployment rates due to the pandemic.”
Earlier this month, Fitch Solutions lowered its growth forecast for the Philippines to 4.2 percent from an earlier outlook of 5.3 percent saying the country continues to struggle amid new COVID-19 outbreaks.
Last month, Fitch Ratings affirmed its investment-grade rating for the Philippines but also revised its outlook for the country to negative from stable, indicating the credit rating may be lowered in the medium term or 1-2 years.