The realization of downside risks in the form of disruptions caused by the COVID-19 Delta variant, has resulted in downward revisions to AMRO staff’s ASEAN+3 growth forecasts for this year. Economic activity in the region is now projected to expand by an aggregate 6.1 percent in 2021, down from the 6.7 percent forecast in March, after posting flat growth in 2020. However, ASEAN+3 economies are gaining recovery momentum and the region as a whole is expected to grow strongly next year, by 5.0 percent.
Rapid vaccinations, along with greater adeptness at targeting containment and support policies, are fueling optimism and providing more clarity on what an “endemic new normal” could look like. Targeted policy measures should continue to support the recovery and minimize scarring effects, while facilitating the transition to the new digital economy. And, any eventual withdrawal of policy support needs to be gradual and well-communicated to avoid cliff effects.
This issue of the Update of the ASEAN+3 Regional Economic Outlook (AREO) covers key developments in the ASEAN+3 region in the last six months, and assesses the attendant risks to the outlook for growth.