ADO 2021—Highlights

Growth is gaining momentum across developing Asia, but renewed COVID-19 outbreaks show the pandemic is still a threat. Even so, the region’s economic revival is underway, supported by a healthy global recovery and progress on vaccines. The region’s growth is forecast to rebound to 7.3% in 2021, moderating to 5.3% in 2022. Excluding high income newly industrialized economies, growth of 7.7% is forecast for this year and 5.6% for next year. Headline inflation—after a marginal decline in 2020—is projected to fall to 2.3% in 2021 on easing food-price pressures, with prices expected to rise by 2.7% in 2022.

Several downside risks weigh on the generally positive outlook. The biggest is that resurgent COVID-19 outbreaks or delayed or ineffective vaccines could once again disrupt mobility and economic activity, setting back the recovery. This and the other risks to the outlook that are discussed in this report are worrying because the pandemic has set back developing Asia’s push toward more environmentally sustainable and equitable growth.

Getting back on this growth path will require mobilizing a vast amount of public and private capital. Recent years witnessed the rapid global and regional expansion of green and social finance, particularly from private sources. While noneconomic factors remain key drivers of this expansion, financial motives are playing an important role. Although measuring the impact of green and social finance is challenging, evidence suggests it is associated with environmental and social benefits. Governments across developing Asia have plenty of scope to nurture sustainable finance through fiscal and regulatory measures. Above all, enforcing common standards of information disclosure and impact measurement will boost green and social finance.

 

For the full report of  the ADO, please click: Asian Development Outlook (ADO) 2021.

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