Its forecast for a number of Southeast Asian economies was downgraded by the International Monetary Fund even while becoming more optimistic about the fortunes of the global economy and the broader Asia-Pacific region.
The five largest developing economies in Southeast Asia – Indonesia, Malaysia, the Philippines, Thailand and Vietnam, are not expected to collectively grow at 4.9 per cent for 2201 by the IMF which was lower than the institution’s previous forecast of a 5.2 per cent growth.
The economic prospect of some of the Southeast Asian countries is being dampened by an increase in Covid cases and renewed lockdowns, said Jonathan Ostry, IMF’s deputy director of the Asia and Pacific department, on Wednesday.
“We are concerned both about the outlook for tourism, when those markets will reopen, and the additional lockdowns and continued measures that the disease’s unexpected turn in some of those countries is creating,” Ostry said in a television interview.
A surge in Covid-19 cases had forced tightening of some restrictions this year in Indonesia, Malaysia and the Philippines. The process of vaccinations in those countries has also been slow compared to many other countries in the rest of the world.
Only about 3.76 per cent of the population of Indonesia have received at least one dose of a Covid-19 vaccine — compared to the global level of 5.76 per cent, showed statistics compiled by Our World in Data. The statistics also showed that the number was at 1.8 per cent and 0.96 per cent for Malaysia and the Philippines respectively.
At the same time however the UMF also raised its forecast for the broader Asia-Pacific region for 2021 to 7.6 per cent from 7.3 per cent. The IMF also raised its projection for global economic growth for 2021 to 6 per cent from its previous forecast of 5.5 per cent.
The brighter prospects this year for the broader Asia-Pacific will not be matched by the advanced economies such as Japan, South Korea, Australia and New Zealand, Ostry said.
“Asia’s a very open, outward-oriented region and there are going to be positive spillovers from the better U.S. picture and the stronger U.S. fiscal stimulus, especially for the Asian advanced economies,” he said.
Its growth projections for China and India were also upgraded by the IMF.
He global body now expects the Chinese economy to grow at 8.4 per cent for 2021 which was higher than the fund’s previous forecast of 8.1 per cent. IMF’s projection for the Indian economy for its fiscal year of 2021-22 was also raised to 12.5 per cent from its earlier estimates of 11.5 per cent.
However there is still a “big worry” about a surge in Covid cases in India, Ostry said. The South Asian country this week overtook Brazil as the second worst-infected nation, behind only the United States.
“In the particular case of India, it was a conservative — I think — projection at 12.5%, others were higher than that and we are still okay with that number though there is certainly downside risks,” said Ostry.
(Adapted from CNBC.com)