The region’s gross domestic product is poised to expand 7.0% this year and 5.3% next, lower than the September forecasts of 7.1% and 5.4% respectively, the ADB said in an update to its Asian Development Outlook.
The bank said Covid-19 infections in the region have receded and vaccinations have improved dramatically, but rising global cases threaten the reopening of economies.
“The emergence of the highly mutated Omicron variant brings additional uncertainty,” it said. “As it appears to be significantly more transmissible than earlier variants, its economic impact could be substantial.”
Southeast Asia is expected to expand 3.0% this year, down from 3.1%. Next year, the region is expected to grow 5.1%, faster than the 5.0% projected earlier.
The economies of Malaysia and Vietnam contracted in the third quarter following their battle against the Delta variant. They are now facing big cuts in growth estimates.
Malaysia is now expected to grow 3.8% this year and 5.9% next, slower than previous estimates of 4.7% and 6.1%, respectively. Vietnam’s GDP growth is expected to fall to 2.0% this year from the previous forecast of 3.8%, before expanding 6.5% next year.
The Philippines is set to expand 5.1% this year, up from 4.5%. The nation is predicted to grow 6.0% next year, when it holds general elections, faster than the previous 5.5%.
Singapore is poised to end the year with a 6.9% expansion, better than the earlier forecast of 6.5%. The city state’s 4.1% growth forecast for next year is unchanged.
The ADB maintained Indonesia’s 3.5% growth projection for this year, but lifted its outlook for Southeast Asia’s largest economy to 5.0% next year from 4.8%.
China is on course to expand by 8.0% this year and 5.3% in 2022, dropping from 8.1% and 5.5%, respectively. On China, the ADB said: “In 2022, growth in industry should moderate given lower export growth calculated from a high base. Existing tightening measures on the real estate market will likely be fine-tuned to stabilise real estate investment.”
The outlook for India’s expansion has also been tempered amid slower than anticipated growth in manufacturing. The region’s second-largest economy is now projected to expand 9.7%, instead of the previous 10.0% forecast. Its projected 2022 growth is still 7.5%.
“Supply chain factors such as chip shortages and rising semiconductor prices will continue to suppress economic growth (in India),” the ADB said.
Central Asia’s growth forecast has been raised to 4.7% this year and 4.4% in 2022, up from 4.1% and 4.2% respectively.
The Pacific subregion is expected to shrink by 0.6% amid Covid-19 outbreaks in Papua New Guinea and Fiji, before expanding 4.7% next year.
As of November, developing Asia’s daily Covid-19 infections had decreased by 71% from its peak in August. Meanwhile, 48.7% of the region’s population had been fully vaccinated, up from 28.7% three months earlier. But the region still lags the vaccination rate of 58.1% in the US and 67.2% in the European Union.
“Vaccine progress in the region remains highly uneven. In 20 economies in developing Asia, the share of the population that is fully vaccinated is still less than 40%, leaving them susceptible to renewed outbreaks,” ADB warned.
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