IMF lowers growth forecast for emerging Asia amid COVID-19 resurgence

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TOKYO, July 27 (Reuters) – The International Monetary Fund lowered this year’s economic growth forecast for emerging Asia on Tuesday as a spike in coronavirus cases due to new variants and slow vaccinations cloud prospects for recovery of the region.

The deterioration, which contrasted with an upward revision of IMF forecasts for advanced countries, highlights the emerging divergence between countries on the pace of recovery from the strains induced by the pandemic.

In an update to its World Economic Outlook (WEO), the IMF forecasts 7.5% growth in emerging Asia this year, down 1.1% from its previous April projection.

This was a much larger deterioration than a 0.4 point drop for emerging economies around the world.

“Growth prospects in India have been revised down following the severe second wave of COVID in March-May and confidence is expected to recover slowly after this setback,” IMF said .

“Similar dynamics are at work in the ASEAN-5 group … where recent waves of infection are slowing activity,” he said.

The IMF cut the growth forecast for India this year by 3.0 percentage points to 9.5%. The projection of the ASEAN-5 group made up of Indonesia, Malaysia, the Philippines, Thailand and Vietnam is down 0.6 points to 4.3%.

China’s 2021 forecast was revised down 0.3 points to 8.1% due to a slowdown in public investment and budget support.

For 2022, the IMF raised the growth forecast for emerging Asia by 0.4 points to 6.4%.

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“We expect further outbreaks of the virus and subsequent tightening of restrictions to delay economic recovery, particularly in South East Asia,” Oxford Economics said in a research note.

“Low vaccination rates outside of China and Singapore also leave many people in the region vulnerable to the setbacks of COVID-19 and the risk that the extent of the economic scars will be far greater than we currently anticipate.” , did he declare.

Editing by Jacqueline Wong

Our Standards: Thomson Reuters Trust Principles.

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