The Asian Development Bank on Tuesday cut its growth forecasts for developing Asia for this year and next to reflect risks and uncertainty brought on by the Omicron variant.
The Manila-based lender now sees 2021 gross domestic product (GDP) growth of 7.0% for developing Asia, down from 7.1%, and 2022 growth of 5.3%, down from 5.4% in September.
“Covid-19 has receded in developing Asia, but rising infections worldwide and the emergence of a fast-spreading variant suggest that the pandemic will take time to play out,” the ADB said in a supplement to its Asian Development Outlook report.
Most of developing Asia’s subregions are forecast to grow slower than previously thought this year, due in part to a weak recovery in China.
China’s economy, which staged an impressive rebound from last year’s pandemic slump, has lost momentum in recent months as it grapples with surging prices, a slowing manufacturing sector, debt problems in the property market and persistent Covid-19 outbreaks.
Further Covid Outbreaks Likely
The ADB projects China’s economy will grow 8.0% this year, slightly weaker than its 8.1% estimate in September, before it slows to 5.3% in 2022, down from its earlier projection of 5.5%.
The recent emergence of Omicron, which the World Health Organization says has been reported by more than 60 countries since it was first detected last month in southern Africa and Hong Kong, “is a sobering reminder that further outbreaks remain a possibility,” the ADB said.
The ADB trimmed its 2021 growth forecast for India to 9.7% from the 10.0% estimate it made in September, but left a 2022 growth forecast unchanged at 7.5%.
To take into account Southeast Asia’s slower third quarter expansion, the ADB cut its growth forecast for the subregion to 3.0% for 2021 from 3.1%, but it raised its growth projection for the subregion next year to 5.1% from 5.0%.
Inflation is expected to remain manageable in Asia, the ADB said, which would allow monetary policy to stay supportive of growth amid continued risks from the pandemic.
- Reuters with additional editing by Kevin Hamlin
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