The International Monetary Fund cut its Asian economic growth projection for 2021 on Tuesday after the highly contagious Covid-19 delta variant triggered a rise in infections in several parts of the region.
The IMF forecasts Asia's Economy to grow by 6.5% in 2021, down from a 7.6% increase predicted in April. The Fund said in its Regional Economic Outlook report for Asia and the Pacific that "The global COVID-19 pandemic is still ravaging the region."
Last year, Asian countries were reasonably effective in controlling Covid. However, several countries, like India, Malaysia, and Vietnam, have had to deal with new waves of infections this year, while vaccine rollouts have been delayed. The IMF downgraded developing nations' economic growth the most in the region.
Despite the reduction, Asia will remain the world's fastest-expanding region this year, according to the IMF. They upgraded their growth forecasts for several advanced Asian economies. Hong Kong is now expected to grow 6.4% in 2021, up from 4.3% previously; while the forecast for Singapore's growth was bumped up to 6%, from 5.2%.
According to the Fund, China and India will drive the region's growth. The IMF forecasts China to expand by 8% this year and India to grow by 9.5% in the fiscal year that ends in March of next year.
However according to the IMF "The projections are subject to high uncertainty regarding the emergence of new variants, the outlook for supply chain disruptions and inflation, and shifts in global financial conditions."