WASHINGTON – The gap between Asia-Pacific’s richer and less well-off economies is increasingly widening, with those that lack enough vaccines for their people lagging behind, the International Monetary Fund (IMF) said on Tuesday (Oct 19).
Although the Asia-Pacific remains the world’s fastest-growing region, the pace this year is shaping up to be weaker than expected, due to the resurgence of the coronavirus pandemic driven by the Delta variant.
The IMF last week updated its forecast for the region’s economic expansion this year to 6.5 per cent, a downgrade from a 7.6 per cent prediction in April.
But the region is expected to grow slightly faster than anticipated next year, as vaccination rates pick up.
Asia’s advanced economies – a group comprising Australia, New Zealand, Japan, Hong Kong, South Korea, Taiwan and Singapore – were projected to grow by 3.7 per cent this year. Its developing economies were collectively forecast to grow by 7.2 per cent this year.
On Tuesday, the IMF called for a broader and faster vaccine roll-out as it warned of the growing gap between advanced and developing economies.
Those that had adequate access to vaccines could look forward to further normalisation, while those that did not faced mounting hospitalisations and deaths because of resurgent infections, it said in its annual Regional Economic Outlook report for the Asia-Pacific.
“No country can recover fully until all countries have broad access to vaccines,” said the IMF, urging vaccine production to be ramped up and excess doses shared. “The pandemic is not over anywhere until it is over everywhere.”
Although Asia’s advanced economies had procured enough vaccines to inoculate their populations twice by August this year, their emerging economy neighbours had enough vaccines for only just over half their populations, said the IMF. It cited data from the Duke University Health Innovation Centre.
For instance, 84 per cent of people in Singapore are fully vaccinated, compared with 18.8 per cent in Vietnam, according to official data.
The IMF also stressed that one country’s surge could soon be that of its neighbours. For instance, the Delta variant became dominant in Asean countries just over one month after a similar development in India.
“No country is safe, even if it achieves high vaccination outcomes,” it said. “New Covid-19 cases in countries with close regional proximity can lead to an increase in a country’s own infections, as movements across borders increase transmissions.”
The report presented data showing that swiftly and broadly inoculating people can significantly boost economic activity over time.
This was consistent with the idea that “a larger share of the population gains greater protection from the virus over time, the risk of infection diminishes, and confidence improves”.
But the report also acknowledged that severe outbreaks may temporarily dampen economic activity, for instance, when people socially distance until cases come down significantly.
Countries that lock down their economies to fight Delta surges, although costly in the short term, can lay the foundation for recovery and medium-term growth, it added.
The IMF noted that five countries in Asean – Indonesia, Malaysia, the Philippines, Singapore and Thailand – are still facing severe challenges from a resurgent virus and weakness in “contact-intensive” sectors requiring much face-to-face interaction.
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