Omicron impact: AfDB cuts growth forecasts for Asia

The Asian Development Bank warned on Tuesday that the highly mutated variant of the Omicron coronavirus could have a “substantial” economic impact, as it cut its growth forecasts for 2021 and 2022 for developing Asia.

Despite a sharp drop in infections and an increase in vaccination in the region stretching from the Cook Islands in the Pacific to Kazakhstan in Central Asia, the global increase in Covid-19 cases has suggested that “the pandemic will take time to unfold, ”he said.

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The Philippines-based lender projects growth of 7.0% in 2021 – from its previous forecast of 7.1% in September – and 5.3% in 2022, down from its previous forecast of 5. 4%.

As the region had to maintain a “strong rebound” and keep inflation at manageable levels, the emergence of Omicron had brought “further uncertainty,” the AfDB said.

“Recent developments in Europe show that widespread viral epidemics can occur even in highly vaccinated countries and force governments to tighten restrictions on mobility,” he said.

“Since it (Omicron) appears to be significantly more heritable than previous variants, its economic impact could be substantial.”

Vaccination rates have increased across developing Asia in recent months, with nearly half of the population fully protected against Covid-19 at the end of November, up from less than a third at the end of August, the lender said.

This allowed many economies to start reopening, boosting manufacturing activity and trade in the region.

But coverage has remained uneven – 20 economies still have less than 40 percent of their populations fully immunized, “leaving them vulnerable to further epidemics.”

And the region still lags behind coverage by almost 60 percent in the United States and more than 67 percent in the European Union.

“New pandemic waves could reverse the current trend of reopening in many economies due to still insufficient vaccine coverage,” AfDB warned.

While a resurgence of Covid-19 infections was the main threat, the AfDB also reported a prolonged slowdown in the housing market in China, rising inflation and disruptions to global supply as risks for consumers. perspectives.

China – where several real estate companies have been plunged into financial crisis following Beijing’s debt tightening – is expected to grow 8.0% this year and 5.3% in 2022.

The AfDB said growth rates were slightly slower than its previous forecast.

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