The Asian Development Bank (ADB) has adjusted its 2021 growth outlook for developing countries in the wake of renewed Covid-19 outbreaks, new virus variants, and an uneven vaccine rollout that has slowed recovery in some economies in the region.
In a supplement to the ‘Asian Development Outlook 2021’, released on Tuesday, ADB said recovery is underway in developing Asia, but the growth projection has been revised down slightly from 7.3 per cent in April to 7.2pc for 2021 following renewed virus outbreaks in some economies.
However, growth forecasts for the major advanced economies were unchanged, it said.
The report noted that the adverse economic impact from new waves of the coronavirus that hit the region between March and June of this year was expected to be limited because both businesses and consumers were better able to adapt to the virus and restrictions than before.
"The GDP growth forecast for the subregion in 2021 is downgraded from 9.5pc in ADO 2021 to 8.9pc but upgraded for 2022 from 6.6pc to 7.0pc," the report said.
Regarding Pakistan, the report stated: "The government of Pakistan estimated growth at 3.9pc in FY2021 (ended 30 June 2021), the improvement underpinned by strong growth in industry and services and steady remittance inflow."
In India, early indicators showed that economic activity was quickly resuming after coronavirus-related restrictions in the country were eased, the supplement stated, adding that the growth projection — downgraded from 11.0pc to 10.0pc — reflects "large base effects".
The ADB also raised the inflation forecast for the South Asian region from 5.5pc to 5.8pc which it said mainly reflected a higher forecast for India.
Meanwhile, the ADB slightly upgraded the East Asian subregions' growth forecast from 7.4pc to 7.5pc on the basis of its performance having outpaced expectations in the first quarter.
"Strong expansion in [China's] industry and exports broadly aligns with ADO 2021 forecasts, as does gradual recovery in services ... in the second half of 2021, fiscal policy is expected to safeguard a smooth transition to growth at a more sustainable rate in 2022."
GDP growth forecasts for China remain unchanged at 8.1pc in 2021 and 5.5pc in 2022, the ADB said.
The GDP growth forecast for Southeast Asia was also reduced from 4.4pc to 4.0pc, the ADB said, citing "mobility restrictions reimposed to combat a Covid-19 resurgence across the region".
On the other hand, the growth projection for Central Asia was slightly revised upwards from 3.4pc to 3.6pc, reflecting an improved outlook for Armenia, Georgia, and Kazakhstan.
The ADB said the Pacific region was expected to grow more slowly (0.3pc) as compared to earlier projections of 1.4pc, noting however that travel bubbles would drive stronger economic recovery in the next fiscal year.
"Asia and the Pacific's recovery from the Covid-19 pandemic continues, although the path remains precarious amid renewed outbreaks, new virus variants, and an uneven vaccine rollout," ADB Chief Economist Yasuyuki Sawada said.
"On top of containment and vaccination measures, phased and strategic rejuvenation of economic activities — for instance, trade, manufacturing, and tourism — will be key to ensure that the recovery is green, inclusive, and resilient," he said.
The Covid-19 pandemic remains the biggest risk to the outlook, as outbreaks continue in many economies, the ADB said.