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Countries in Southeast Asia that failed to administer Covid-19 vaccines quickly enough and are suffering from outbreaks of the disease are causing growing regional economic divergence, the Asian Development Bank said on Wednesday.
The AfDB has lowered its growth forecast for 2021 for major economies, including Thailand, Indonesia, the Philippines and Vietnam, while raising its forecasts for China, Taiwan and South Korea.
“Regional growth trajectories diverge,” the Japan-backed multilateral bank said in issuing a biannual update of its development outlook in Asia for 2021.
“Economies that have succeeded in containing the pandemic and actively deploying vaccines are benefiting more than others from the recovery in global demand. “
Infections caused by the Delta variant of the coronavirus have led to record outbreaks in several Southeast Asian countries this year, exposing their delays in vaccine supply and hampering manufacturing in industries ranging from footwear to semiconductors .
The bank said the recovery in several of the region’s largest economies was being hampered by new waves of infections and slower progress on immunization.
“Indonesia, Thailand and the Philippines have recently battled epidemics and vaccination rates are around 20%,” Abdul Abiad, director of the AfDB’s macroeconomic research division, told the Financial Times. “The growth rates should have been higher if they could have vaccinated faster. ”
The bank said it expects Southeast Asian economies to grow an average of 3.1% this year, slower than the 4.4% it forecast when it released. its previous economic outlook in April.
The AfDB cut its forecasts for Indonesia, the largest economy in Southeast Asia, by a percentage point to 3.5% and for Thailand, the second largest, by more than 2 percentage points to 0.8%, compared to its previous forecasts.
Thailand this week raised its public debt ceiling to 70% from 60% to allow the government to borrow more in response to the pandemic, which has particularly affected its tourism-dependent economy.
In Vietnam, formerly one of the fastest growing economies in Asia, where an outbreak of the Delta variant concentrated in Ho Chi Minh City crippled business, the AfDB cut its growth forecast to 3.8 percent, from 6.7%.
However, the bank raised its forecast for Singapore, which has vaccinated around 80% of its population, by half a point to 6.5%.
And it improved its forecast for “developing” East Asia, which includes China and South Korea, by 0.2 points to 7.6%.
The AfDB said the risks to regional economies remained “on the downside” and included new virus variants, slower-than-expected vaccine deployments and possible geopolitical tensions.
Twitter: @JohnReedwrites
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