The Asian Development Bank raised its economic growth projections for the next year but signaled divergence in the recovery paths among regional economies.
In its latest Asian Development Outlook 2021 Update, released Wednesday, the ADB said developing Asia will expand 5.4 percent next year, instead of 5.3 percent estimated previously.
Meanwhile, the outlook for 2021 was downgraded to 7.1 percent from 7.3 percent.
While growth forecasts are raised for East Asia and Central Asia, downward revisions for the rest of the region weighed on the outlook.
“The COVID-19 continues to besiege developing Asia, but vaccines are changing the nature of the pandemic,” ADB said. Uneven vaccination coverage is furthering regional divergence.
The agency cited the emergence of new variants, slower-than-expected vaccine rollouts, and waning vaccine effectiveness as the main risks to the economic outlook. The ADB cautioned that geopolitical tensions, financial turmoil, and disruptions to global supply chains may also undermine the region’s growth prospects.
The Manila-based lender said growth forecasts have been revised up for those economies that have managed to contain COVID-19.
The rapid economic recovery will continue across East Asia. The sub-region was forecast to grow 7.6 percent in 2021 and 5.1 percent in 2022.
Growth in China will remain strong, despite a protracted recovery in household consumption, the lender said. The GDP growth projection remained unchanged at 8.1 percent in 2021 and 5.5 percent in 2022.
The growth forecast for India in fiscal year ending September 2021 was revised down, as May’s spike in COVID-19 dented the recovery. The economy is expected to rebound strongly in the remaining three quarters, and grow 10.0 percent in the full fiscal year before moderating to 7.5 percent in FY2022.
The outlook varies across South Asia. The sub-region was projected to expand more slowly this year than earlier projected, but faster next year. According to ADB, GDP will rise 8.8 percent in 2021 and 7 percent next year.
Southeast Asia will recover at a much slower pace than earlier projected. The outlook for 2021 was lowered to 3.1 percent from the earlier projection of 4.4 percent and to 5.0 percent from 5.1 percent for 2022.
Central Asia’s growth forecast was lifted to 4.1 percent from the earlier projection of 3.4 percent for 2021 and to 4.2 percent from 4.0 percent for 2022.
Meanwhile, the Pacific will continue contracting for the second consecutive year and by 0.6 percent in 2021, a downward revision from ADO 2021’s projection of 1.4 percent growth. By contrast, the forecast for 2022 was upgraded to 4.8 percent from 3.8 percent.