Developing Asia's economic rebound this year could be stronger than previously thought, the Asian Development Bank said on Wednesday, underpinned by expectations of a solid global recovery and progress on vaccines.
But the Manila-based lender was quick to caution that risks to its forecasts were skewed more to the downside because new outbreaks and delays in vaccine rollout could prolong disruptions to mobility and stall regional economic activity.
Developing Asia, which groups 45 countries in the Asia-Pacific, is forecast to grow 7.3% in 2021, the ADB said in its Asian Development Outlook report, stronger than its previous estimate of 6.8% and follows a 0.2% contraction last year.
For 2022, the region is projected to grow 5.3%.
"Growth is gaining momentum across developing Asia, but renewed Covid-19 outbreaks show the pandemic is still a threat," said Yasuyuki Sawada, ADB chief economist, said in the report.
Geopolitical tensions, political turmoil, production bottlenecks, financial turmoil and long-term scarring effects of learning losses from school closures due to the pandemic also threaten recovery, Sawada said in a separate briefing.
Asia accounts for more than 16% of the global case load of 147.9 million coronavirus infections, according to a Reuters tally. With more than 319,000 deaths, the region accounts for 9.8% of the global Covid-19 toll.
As some economies continue to struggle to contain the virus and its new variants, the ADB said the recovery would be uneven.
China's economic rebound from a pandemic-induced slump is forecast to be the strongest this year, with growth seen at 8.1%, driven by strong domestic demand and exports, before moderating to 5.5% in 2022, the ADB said.
By region, South Asia will record the fastest economic recovery this year, with the ADB predicting an expansion of 9.5% after a 6.0% contraction in 2020, buoyed by India's economic revival. Even as the coronavirus crisis in India remained grim, Sawada said ADB's 11.0% growth forecast for the South Asian country this year, which follows an 8.0% slump in 2020, is "achievable at this stage".
"India's vaccine rollout is going well," Sawada said putting it on course to vaccinate 300 million by August and achieve herd immunity by 2022.
India leads the world in the daily average number of new infections reported, accounting for one in every 3 infections reported worldwide each day, according to a Reuters tally.
Southeast Asia's 2021 growth forecast was trimmed to 4.4% from a previous estimate of 5.5%, dragged down by a projected 9.8% decline in Myanmar's economic output, which was hit hard by mass protests, strikes and sanctions following a military coup on February 1.
Easing food price pressures should slow inflation to 2.3% this year, from 2.8% last year, but it is predicted to quicken to 2.7% in 2022.