SINGAPORE (ICIS)--The International Monetary Fund (IMF) on Monday upgraded the 2021 growth forecast for emerging and developing Asian economies to 8.6%, reflecting a stronger recovery than initially expected after lockdowns were eased in some large countries.
However, still high COVID-19 caseloads in large countries such as Indonesia and Malaysia has put a lid on growth prospects, the IMF said in its World Economic Outlook report.
The IMF had previously in January set its growth projection for emerging and developing Asian economies at 8.3% for 2021, after the 0.1% contraction in 2020.
“Considerable differentiation is expected between China - where effective containment measures, a forceful public investment response, and central bank liquidity support have facilitated a strong recovery - and others,” it said.
The IMF upgraded its 2021 growth forecast for China to 8.4% from its 8.1% projection in January. China's economy expanded by 2.3% in 2020.
India’s GDP projection was raised to 12.5% from the previous estimate of 11.5%, while the IMF's projection for five ASEAN economies as a whole - Indonesia, Malaysia, the Philippines, Thailand, and Vietnam - was downgraded to 4.9% from 5.2% previously.
India's economy contracted by 8% last year while the ASEAN-5 economies contracted by 3.4%.
In emerging market and developing economies, effective protection via vaccines will remain unavailable for most of the population in 2021, the IMF said.
“Lockdowns and containment measures may be needed more frequently in 2021 and 2022 than in advanced economies, increasing the likelihood of medium-term scarring effects on the potential output of these countries,” it said.
Among emerging market and developing economies, China had already returned to pre-COVID GDP last year, while many others are not expected to do so until well into 2023.
Global GDP is expected to grow at 6% in 2021 and 4.4% in 2022.
The IMF said the world economy contracted 3.3% in 2020, a modest upgrade from an estimated contraction of 3.5% in its January update.
“The IMF forecast, if realized, would mark the fastest pace of global growth since 1976 but also comes off the steepest annual downturn of the postwar era last year as the pandemic brought commerce around the world to a near standstill at times,” Singapore-based UOB Global Economics & Markets Research said.
Focus article by Nurluqman Suratman