The International Monetary Fund downgraded its forecasts for several Southeast Asian economies even as it turned more optimistic about the global economy and Asia-Pacific more broadly.
The IMF expects the five largest developing economies in Southeast Asia to collectively grow by 4.9% in 2021, down from its previous projection of 5.2%. Those five economies are Indonesia, Malaysia, the Philippines, Thailand and Vietnam.
Indonesia, Malaysia and the Philippines are among those that had to tighten some restrictions this year following a surge in Covid cases. Vaccination in those countries is also progressing at a slower pace compared with many nations globally.
Statistics compiled by Our World in Data showed that 3.76% of people in Indonesia have received at least one dose of a Covid vaccine — lower than the global level of 5.76%. The share stood at 1.8% and 0.96% for Malaysia and the Philippines, respectively, according to the data.
A ‘big worry’ in India
The downgrade in growth forecasts for some Southeast Asian economies came as the IMF upgraded its growth forecast for the broader Asia-Pacific region from 7.3% to 7.6% for this year. The fund also bumped up its 2021 growth projection for the global economy from 5.5% to 6%.
Among the region’s developing economies, the IMF upgraded its growth projections for China and India.
China is now expected to grow by 8.4% this year, higher than the fund’s previous forecast of 8.1%; while India is projected to expand by 12.5%, faster than the 11.5% that the IMF previously expected.
But Ostry said there’s still a “big worry” about a surge in Covid cases in India. The South Asian country this week overtook Brazil as the second worst-infected nation, behind only the U.S.
“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.
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