Asia’s reward for effectively tackling the COVID-19 pandemic will be one of the fastest economic growths in the world in 2021.
But economic success could be hampered by the slow launch of the vaccine in the region and deadly new waves of COVID-19, particularly the catastrophic outbreak that is killing thousands every day in India.
That’s the promise – and the warning – of the Asian Development Bank’s 2021 economic forecast for the region, released Wednesday.
The 46 economies of the Asia-Pacific region, excluding Japan and Australia, are expected to recover from the pandemic and grow 7.3% this year.
Compare that to growth forecasts of 6.2% in the US and 3.8% in the Eurozone, and Asian nations appear to be emerging much faster from the economic devastation caused by COVID-19.
ADB, whose largest shareholders are Japan and the United States, is a development bank that invests in projects aimed at promoting economic growth and reducing poverty in the Asia-Pacific region.
The severe epidemic in India drives home the urgency of governments across the region to step up their overdue vaccination programs, says Abdul D. Abiad, director of the ADB’s macroeconomic research division.
“Now it’s a race between vaccinations / herd immunity and new variants that can emerge and spread,” he tells TIME via email. “If the latter wins, the second half will lose traction.”
Although many places in Asia have performed relatively well in the fight against the coronavirus, the region is now lagging behind in introducing vaccines. The United States has given at least one dose of a COVID-19 vaccine to over 40% of its population, according to the University of Oxford Our world of data project. In the affluent city-state of Singapore, a leader in Asia’s vaccination race, just over 20% of people had a chance. In Hong Kong’s financial center, less than 12% of people have received a dose. Meanwhile, in India less than 9% of people, and in South Korea and Indonesia less than 5% of people, have had the first blow. Less than 2% of the population has received a first blow in Japan, the Philippines and Thailand, all of which are battling new waves of COVID-19.
The reasons are complex, but Abiad says the biggest challenge facing vaccination programs in Asia right now is delivering doses. “The demand from people wishing to get vaccinated exceeds the supply of vaccines available in most countries,” he says.
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Other risks to Asia’s economic recovery include geopolitical tensions between the United States and China, limited vaccine efficacy, and long-term educational losses due to school closures.
Divergent recovery paths
The region’s economic recovery will be uneven as some countries fight new epidemics. The ADB predicts that India will grow by about 11% in 2021, although that figure is already at risk with the latest outbreak, Abiad says.
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India reports more than 300,000 new cases per day with daily deaths approaching 3,000 (and the number of unofficial cases and deaths is believed to be much higher). Desperate appeals for oxygen and critical care beds for the sick have been circulating on social media platforms.
However, at a press conference, ADB chief economist Yasuyuki Sawada said India’s huge growth forecast remains “achievable”. He added: “The vaccine launch in India is going well.”
Countries like China and Vietnam, which have strong exports of manufactured goods and have kept COVID-19 in check, “have been able to ride the wave of growing global demand,” Abiad says. China is expected to grow more than 8% this year, after growing 2.3% in 2020, a year in which many Asian countries entered recession.
But even small outbreaks of COVID-19 can threaten economic recovery. A wave of COVID-19 of a few thousand cases a day in Thailand could delay the country’s plan to reopen tourism.
The Pacific region, which is also heavily dependent on tourism, is expected to perform the worst of any Asia-Pacific region, with growth of a modest 1.4%. Travel bubbles are expected to help some countries start recovering.
“Tourism-dependent economies in the Pacific and elsewhere face a slow road back,” the ADB said.