September 27 (Reuters) – The recovery of the East Asia and Pacific region has been compromised by the spread of the COVID-19 Delta variant, which is likely to slow economic growth and increase inequality in the region, the World Bank said on Monday.
Economic activity started to slow in the second quarter of 2021 and growth forecasts have been revised down for most countries in the region, according to the World Bank’s economic update on East Asia and the Pacific for fall 2021.
While the Chinese economy is expected to grow 8.5%, the rest of the region is expected to grow 2.5%, almost 2 percentage points lower than expected in April 2021, the World Bank said.
âThe economic recovery of developing countries in East Asia and the Pacific faces a setback,â said Manuela Ferro, World Bank Vice President for East Asia and the Pacific .
“While in 2020 the region contained COVID-19 while other regions of the world struggled, the increase in COVID-19 cases in 2021 has reduced the growth outlook for 2021.”
The report estimates that most countries in the region, including Indonesia and the Philippines, can immunize more than 60% of their population by the first half of 2022. Although that would not eliminate coronavirus infections , this would significantly reduce mortality, allowing economic activity recovery.
The damage from the resurgence and persistence of COVID-19 is likely to hurt growth and increase inequality in the long run, the World Bank has said.
“Accelerated vaccination and testing to control COVID-19 infections could revive economic activity in struggling countries as early as the first half of 2022 and double their growth rate next year,” said Aaditya Mattoo, economist in Head of the World Bank for East Asia and the Pacific.
“But in the longer term, only deeper reforms can prevent slower growth and growing inequalities, a depleting combination the region has not seen this century.”
The World Bank has said the region will need to make serious efforts on four fronts to deal with the increase in the coronavirus: tackling vaccine hesitancy and limitations in distribution capacity; improve testing and tracing; increasing regional vaccine production; and strengthening of local health systems.
Report by Kanishka Singh in Bangalore
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