IMF cuts GDP growth forecast for ASEAN-5 to 4.3%

MANILA, Philippines — The International Monetary Fund (IMF) has lowered its economic growth forecast for member countries of the Association of Southeast Asian Nations (ASEAN-5) as the recent high COVID-19 infection rates continue to dampen the region’s recovery from the pandemic-induced recession.

In its July 2021 World Economic Outlook (WEO), the multilateral lender cut its economic growth forecast for ASEAN-5 to 4.3 percent from 4.9 percent based on the April 2021 WEO projection.

Aside from the Philippines, other ASEAN-5 members are Indonesia, Malaysia, Thailand and Vietnam. The IMF did not provide the breakdown on the latest economic performance forecasts for the five countries.

“Similar dynamics are at work in the ASEAN-5 group, where recent infection waves are causing a drag on activity,” the IMF said.

For 2022, the IMF raised its GDP growth forecast for the region to 6.3 percent from the original target of 6.1 percent.

Just last June, the IMF lowered its GDP growth projection for the Philippines to 5.4 percent from the original target of 6.9 percent due to the delays in the government’s vaccination program.

The lender, however, raised next year’s GDP growth forecast to seven instead of 6.5 percent.

“The slowing in the recovery in the first half is mostly due to the second wave of the pandemic which peaked in April, necessitating some stricter quarantine measures and which has also weighed on confidence. But now, hopefully the second wave should be on the way out,” IMF mission chief Thomas Helbling said in a virtual press briefing held in June.

The multilateral lender also lowered its GDP growth forecast for emerging market and developing economies to 6.3 percent instead of 6.7 percent this year, but raised next year’s projection to 5.2 percent from the original target of five percent.

“The forecast for the group is revised down by 0.4 percentage point in 2021 compared with the April WEO, largely because of growth markdowns for emerging Asian economies,” the IMF said.

It lowered the GDP growth forecast for emerging and developing Asia to 7.5 percent instead of 8.6 percent this year, but hiked next year’s projection to 6.4 percent.

The GDP growth for China was slashed to 8.1 percent this year and hiked to 5.7 percent next year on a scaling back of public investment and overall fiscal support, while that of India was reduced to 9.5 percent instead of 12.5 percent for this year and raised to 8.6 percent from the previous target of seven percent for next year due to severe COVID-19 wave from March to May.

The IMF maintained the world GDP growth forecast at six percent for this year, but expects a faster expansion of 4.9 percent instead of 4.4 percent for 2022. The global economy contracted by 3.2 percent last year after growing by 2.8 percent in 2019 due to the impact of the COVID-19 pandemic.