IMF cuts Asia growth forecast after months of record virus numbers

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IMF
IMF

The International Monetary Fund (IMF) on Tuesday cut its 2021 economic growth forecast for Asia to 6.5 per cent, citing “new peaks of the pandemic cycle.”

Many countries in the region have reported record coronavirus-related deaths and case numbers in the months since the IMF’s April forecast of around 7.5-per-cent growth for this year.

“The pandemic’s resurgence has triggered lockdowns that are hampering the recovery,” the IMF said in its latest regional economic outlook.

Despite the impact of the virus and the harsh restrictions applied in countries such as Australia and Malaysia, Asia is likely to remain the world’s fastest-growing region, the IMF said, while warning that the pandemic is widening a “divide” between the region’s advanced economies and their emerging or developing counterparts.

The region’s biggest economy, China, is set to grow by 8 per cent, the IMF said, with Japan, the second biggest, looking at 2.4-per-cent growth.

India’s growth could hit 9.5 per cent this year after contracting by over 7 per cent in 2020, but “other emerging market and developing economies” such as Indonesia, Malaysia, the Philippines and Thailand “are still facing severe challenges from a resurgent virus and weakness in contact-intensive sectors.”

The IMF last week said the global economy could grow by 5.9 per cent this year, a slight drop on its July forecast which it put down to “advanced economies” being hit by supply-chain disruptions exacerbated by recent pandemic outbreaks in Asia’s manufacturing hubs.

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