As per a newly released regional economic outlook, the International Monetary Fund (IMF) has reviewed down its 2021 economic growth forecast for Asia to 6.5 per cent, down by 1.1 percentage points from its April projection.
According to the official reports, Chang Yong Rhee, director of the IMF’s Asia and Pacific Department stated that the resurgence of the pandemic, amid initially low vaccination rates, slowed the recovery in the Asia-Pacific region, especially in emerging market and developing economies. The divergence between Asian advanced economies and developing economies is deepening, with output levels in the emerging market economies and low-income countries expected to remain below pre-pandemic trends in the coming years, reflecting differences in policy support and vaccination rollout.
For advanced economies, the latest IMF forecast is broadly unchanged for 2021 with upgrades in South Korea and New Zealand and downgrades in Japan and Australia. China is projected to grow by 8.0 per cent in 2021, down by 0.4 percentage points from the April projection, according to the report.
The report further added that India is projected to grow by 9.5 per cent after a sharp decline in 2020. While the pandemic surge earlier this year had a large adverse impact on growth, the subsequent rebound inactivity has gained strength. The IMF official warned that the main downside risk is related to evolving pandemic dynamics, such as the possibility of Covid-19 becoming an endemic, and lower vaccine efficacy against new variants.
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