THE Asian Development Bank’s (ADB) latest economic forecast says developing Asia is set to rebound to 7.3 per cent this year, supported by a healthy global recovery and early progress on COVID-19. However, it also flagged the wave of new cases as a downside risk in the region.

The projected economic resurgence follows a 0.2 per cent contraction last year due to the pandemic, according to the Asian Development Outlook (ADO) 2021, released on Wednesday.

The region’s growth is forecast to moderate to 5.3 per cent in 2022. Excluding the newly industrialised economies of Hong Kong, China, South Korea, Singapore and Taiwan, developing Asia’s economic activity is expected to grow 7.7 per cent this year and 5.6 per cent in 2022-23.

"Growth is gaining momentum across developing Asia, but renewed COVID-19 outbreaks pose a threat to recovery," said ADB Chief Economist Mr Yasuyuki Sawada. "Economies in the region are on diverging paths. Their trajectories are shaped by the extent of domestic outbreaks, the pace of their vaccine rollouts, and how much they are benefiting from the global recovery."

Rising exports are boosting some economies in developing Asia amid strengthening global economic activity, including a rebound in manufacturing. Progress on the production and delivery of COVID-19 vaccines has contributed to this momentum, but the pandemic remains the biggest risk for the region as potential delays in vaccine rollouts or significant new outbreaks could undermine growth.

Other risks include increasing geopolitical tensions, production bottlenecks, financial turmoil from tightening financial conditions, and long-term scarring – for instance, learning losses due to school closures.

Most economies in developing Asia will see healthy growth this year and in 2022, said the ADB.

Central Asian economies are forecast to grow 3.4 per cent on average this year while trade-dependent economies of Southeast Asia will also recover to grow 4.4 per cent this year. East Asia’s GDP is expected to grow 7.4 per cent while South Asia’s GDP growth is expected to rebound to 9.5 per cent. Pacific economies, still affected by global travel restrictions and a collapse in tourism, will post modest growth at 1.4 per cent.

The ADB predicts China’s economy to expand 8.1 per cent this year, driven by strong exports and a gradual recovery in household consumption. India’s economy, meanwhile, is expected to grow 11 per cent in 2021-22 amid a strong vaccine drive.