ADB: Asia below pre-pandemic levels as variants slow rebound

Developing economies in Asia will likely grow at a slower pace than earlier expected due to prolonged COVID-19 outbreaks and uneven progress in vaccinations, the Asian Development Bank said in a report Wednesday.

The regional lender lowered its outlook for economic growth to reflect renewed coronavirus outbreaks as variants spread, prompting fresh pandemic precautions.

The Manila, Philippines-based ADB expects 7.1% growth in 2021, falling to 5.4% in 2022. The forecast in April was for 7.3% growth this year and 5.3% in 2022.

Most regional economies will remain below their pre-pandemic levels into 2022, and some of the losses from the crisis will be permanent, ADB economists said.

“Support for businesses and households will continue to be important for the economic recovery," Joseph Zveglich, the bank's acting chief economist, said in an online briefing.

The forecast for China's growth remained at 8.1% in 2021, with growth expected to slow to 5.5% in 2022. The country where the virus was first reported in 2019 has adopted a “zero tolerance" policy that has kept outbreaks under control and life in much of the country close to normal.

But as is true for much of the region, the country is discouraging travel inside its borders and allowing only minimal international travel.

The outlook for other parts of Asia, where outbreaks have been more severe, was less upbeat.

Growth in Southeast Asia is forecast at 3.1% this year, despite the rebound effect from a contraction in 2020. In 2022, the ADB expects the region's economy to expand at a 5.0% pace.

In South Asia, where outbreaks flared in the spring, the ADB expects economic growth of 8.8% this year and 7.0% next year.

The economists forecast only moderate inflation despite widespread concern that surging prices for oil and...