The Asian Development Bank (ADB) has warned that the highly mutated Omicron coronavirus variant could have a “substantial” economic impact, as it trimmed its 2021 and 2022 growth forecasts for developing Asia.
Despite a sharp drop in infections and increased vaccination across the region stretching from the Cook Islands in the Pacific to Kazakhstan in Central Asia, the global surge in Covid-19 cases suggested “the pandemic will take time to play out”, it said.
The Philippines-based lender forecast growth of 7.0 per cent in 2021 – compared with its previous prediction in September of 7.1 per cent – and 5.3 per cent in 2022, down from its earlier forecast of 5.4 per cent.
While the region was expected to sustain a “strong rebound” and keep inflation at manageable levels, the emergence of Omicron had brought “additional uncertainty”, the ADB said.
“Recent developments in Europe show that extensive virus outbreaks can occur even in highly vaccinated countries and force governments to retighten mobility restrictions,” it said.
“As it [Omicron] appears to be significantly more transmissible than earlier variants, its economic impact could be substantial.”
Vaccination rates have increased across developing Asia in recent months, with nearly half of the population fully protected against Covid-19 at the end of November, compared with less than a third at the end of August, the lender said.
That has enabled many economies to start reopening, boosting manufacturing activity and trade in the region.
But coverage remained uneven – 20 economies still have less than 40 per cent of their populations fully vaccinated, “leaving them susceptible to renewed outbreaks”.