MANILA - The Asia Pacific Region's economy is seen to grow by 4.3 percent in 2022, slower compared to the 2021 forecast of 5.6 percent, Moody's Analytics said Tuesday.
Although Southeast Asia's recovery lagged, its growth is likely to accelerate in the coming year as social distancing rules ease, Moody's said in a statement.
"By the end of 2022, all major economies in the region, including Southeast Asia, will have finally achieved full recovery as measured by real GDP that exceeds its level of 2019's fourth quarter," Moody's Analytics said.
The region in early 2021 was hit by the more transmissible COVID-19 Delta variant, which resulted in output decline but "modest" compared to the impact of last year's lockdowns, it said.
Goods-producing industries buoyed the region in the recent months due to the increase in export volume, Moody's said.
In the Philippines, an improvement in exports contributed to its better-than-expected third quarter growth of 7.1 percent, the statement said.
The country's gross domestic product (GDP) expanded in the quarter despite the reimposition of lockdowns in August and September.
"Domestic demand will add to export-driven growth set to power the regional economy into the first half of 2022, Moody's said.
The rising vaccination rates across the region also boost the outlook for 2022, it said.
The largest economies in the region, including China, Japan, South Korea, Malaysia and Singapore along with Australia and New Zealand have reached "herd resilience" with over 80 percent of the population 12 years old and over fully vaccinated.
But despite the high vaccination rate, there are still risks to the economic outlook as seen in Singapore. This means "vaccinations may not be enough to buttress the economy against the next wave of COVID-19," it said.
Other factors seen to drive growth in the region are the expected increase in mobility thus boosting retail. Employees returning to their offices, accelerating manufacturing the unclogging of supply chains were also cited.
The slowing growth in China and its zero-COVID-19 policy, meanwhile, are likely to dampen the pace of economic recovery in the region, Moody's said.
"The continued restrictions on international travel in and out of China will limit the impact of opening international travel lanes around the region," it said.
Vietnam, Thailand, the Philippines and Singapore were highly dependent upon arrivals from China. "Without their return, demand for travel and hospitality services will be slow to recovery," Moody's said.
The US Federal Reserve's current policy outlook allows central banks in the region to "sit tight" and support economic recovery. However, there are risks if the Fed accelerates its policy-rate normalization sooner than late 2022.
The Bangko Sentral ng Pilipinas earlier said it is unlikely to raise interest rates for the rest of the year. It has one more rate-setting meeting before the end of the year.
The BSP has kept the country's benchmark rate at a record low 2 percent for a year now.