ADB cuts developing Asia 2021 growth outlook to 7.1% as Covid concern drags on

by HARIZAH KAMEL / pic by TMR FILE

THE Asian Development Bank (ADB) has lowered its 2021 economic growth outlook for developing Asia to 7.1% from 7.3% in April amid continuing concerns over the Covid-19 pandemic.

However, the growth outlook for 2022 is raised to 5.4% from 5.3%, according to an update of its flagship economic publication Asian Development Outlook (ADO) 2021.

“Developing Asia remains vulnerable to the Covid-19 pandemic, as new variants spark outbreaks, leading to renewed restrictions on mobility in some economies. Policy measures should not only focus on containment and vaccination, but also on continuing support to firms and households and reorienting sectors in the economy to adapt to a ‘new normal’ once the pandemic subsides to kickstart the recovery,” said ADB acting chief economist Joseph Zveglich, Jr.

ADB said Covid cases in developing Asia have risen since the Delta variant of the virus emerged in April, followed by new daily cases that peaked at 430,000 in May. More than 163,000 new daily cases were recorded on Aug 31. 

Vaccination progress in developing Asia remains uneven and lags behind that of advanced economies. As of Aug 31, 28.7% of the region’s population had full vaccine protection, compared with 51.8% coverage in the United States and 58.0% in the European Union.

ADB noted that the recovery path within the region also remains uneven, citing the forecast for Southeast Asia and the Pacific have been revised downward, as economies in these subregions continue to grapple with new virus variants, continued lockdowns and restrictions, and slow vaccine rollouts.

Additionally, ADB said inflation in developing Asia is expected to remain in check, at 2.2% this year and 2.7% in 2022. The current trend of higher international commodity and food prices could stoke inflation in some of the region’s economies.