SINGAPORE — Southeast Asian economies will recover at “a much slower pace” than previously thought due to recurring waves of Covid-19, the Asian Development Bank said Wednesday.
The bank lowered its growth forecast for the region to 3.1% for 2021, from its previous forecast of 4.4%. ADB downgraded economic growth projections for all Southeast Asian economies — except Singapore and the Philippines.
In 2022, ADB expects Southeast Asia to grow by 5%, slightly lower than its previous forecast of 5%.
“This subregion’s recovery continues to be curtailed by recurring spikes of COVID-19 cases, resulting in the reimposition of stringent containment measures in some economies,” the bank said in an update to its Asian Development Outlook 2021.
Major Southeast Asian economies including Indonesia, Thailand, Malaysia and Vietnam reported a sharp rise in daily Covid infections and deaths in recent months. The spike in cases and deaths was attributed to the highly infectious delta variant.
Southeast Asia plays a major role in the global manufacturing supply chain. Lockdowns and social-distancing measures in the region have prolonged a global shortage of semiconductors, and constrained the supplies of goods such as coffee and clothing.
Across developing Asia, many countries are slow in vaccinating their people — and that’s holding back economic recovery, said ADB.
“If you look at developing Asia as a whole … about 35% of the population has been fully vaccinated. That’s well below what you see in the U.S. and Europe,” Abdul Abiad, director of macroeconomic research at ADB, told CNBC’s “Street Signs Asia” on Wednesday.
“More importantly, it’s been very uneven,” he said, noting that two-thirds of countries in the region have vaccination rates of 30% and below.
ABD said developing Asia is expected to grow by 7.1% this year, lower than its previous forecast of 7.3%. But the bank upgraded its 2022 growth forecast for the region to 5.4% from 5.3%.