fbpx Economic Forecasts: September 2021 | Asian Development Bank

Asian Development Outlook Update, September 2021

Economic Forecasts

COVID-19 continues to besiege developing Asia, but vaccines are changing the nature of the pandemic. Quicker rollouts of vaccines, successful containment, and strong global demand are enabling growth in some economies; new outbreaks and slower vaccinations are holding back recovery in others.

Key Messages

  • Growth forecasts for developing Asia are slightly revised: down to 7.1% in 2021 from 7.3% in April ADO, and up to 5.4% in 2022 from 5.3%. 
  • COVID-19 continues to besiege developing Asia, but vaccines are changing the nature of the pandemic. Uneven vaccination coverage is furthering regional divergence.
  • Inflation is projected at 2.2% in 2021 and 2.7% in 2022. 
  • A resurgence in the COVID-19 pandemic—possibly due to new virus variants, waning effectiveness of vaccines or slow progress on vaccination—remains the main risk.
  • The theme chapter discusses the challenges to Asian agriculture from three ongoing trends: changing demand, changing demographics, and a changing and fragile environment.

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Developing Asia Outlook

This Update projects the regional economy to expand at a slower rate than forecast in Asian Development Outlook 2021 in April. While growth forecasts are raised for East Asia and Central Asia, downward revisions for the rest of the region weigh on the outlook. The recovery in global demand for exports from developing Asia, supported by robust growth in advanced economies, will continue to benefit the region's export-oriented economies. But the recovery momentum has weakened in economies battling renewed waves of COVID-19.

Acting Chief Economist Joseph Zveglich discusses how ADB is lowering its 2021 economic growth outlook for developing Asia amid continuing concerns over the COVID-19 pandemic.

Inflation

Regional inflation is forecast to remain moderate at 2.2% this year, before accelerating to 2.7% in 2022. Tepid inflation will be shaped by declining food prices in the PRC and weaker demand in economies hit by new waves of COVID-19. The continuing trend of rising international commodity prices in the first half of 2021 could stoke inflation in economies where pass-through effects on domestic prices are significant.

Theme Chapter: Transforming Agriculture in Asia

Asia must transform its agriculture to tackle challenges from three ongoing trends: changing demand, changing demographics, and a changing and fragile environment.

Food demand is increasing and shifting toward animal products, requiring more resource-intensive agricultural production. But Asia’s agricultural productivity is hindered by a rural population that is shrinking and aging. And the sector is exposed to risks from a changing climate, and from agricultural practices that are environmentally unsustainable.

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Innovation can help farmers increase agricultural productivity and meet changing demand in a sustainable way.

New approaches have emerged to help Asia’s smallholder farmers access agricultural machine services and increase labor productivity. Improved technologies and practices are helping farmers increase productivity while reducing overuse of chemical inputs and water. And rapid but regulated expansion of aquaculture production in Asia can provide consumers animal protein from seafood products.

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Support systems are needed for Asia’s farmers.

Early warning systems and insurance programs can mitigate impacts of extreme weather shocks on farmers and rural communities. Expanding value chains will allow farmers to diversify their production to high-value crops. Digital technologies can assist farmers and traders reach new markets, just as they helped urban consumers during the COVID-19 pandemic. Government policies should focus less on traditional production support, and instead encourage market-oriented innovations.

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Boosting agricultural productivity is important to reduce poverty, improve food security, and support Asia’s development. Transforming the sector by incorporating technology, innovation, and inclusive policies and efforts will be key.


Publication and Links

Asian Development Outlook (ADO) 2021 Update

Asian Development Outlook (ADO) 2021 Update

The Asian Development Outlook analyzes economic and development issues in developing countries in Asia. This includes forecasting the inflation and gross domestic product growth rates of countries throughout the region, including the People’s Republic of China and India.