According to the World Bank’s latest Global Economic Prospects report. Global growth is expected to decelerate markedly from 5.5 percent in 2021 to 4.1 percent in 2022 and 3.2 percent in 2023 as pent-up demand dissipates and as fiscal and monetary support is unwound across the world.
The rapid spread of the Omicron variant indicates that the pandemic will likely continue to disrupt economic activity in the near term. In addition, a notable deceleration in major economies—including the United States and China—will weigh on external demand in emerging and developing economies.
Growth in EAP is projected to decelerate to 5.1 percent in 2022, reflecting a slowdown in China. Growth in China is forecast to slow to 5.1 percent in 2022, near estimates of potential growth, due to the lingering effects of the pandemic and tighter regulations on certain segments of the economy.
The region is expected to face a steady decline in global demand, as growth in major economies moderate as Spread of COVID-19 Variants alongside Inflation, debt, and Inequality intensifies uncertainty.
International travel is projected to remain below pre-pandemic levels over the forecast horizon amid the lingering pandemic. Indonesia’s growth is expected to rebound to 5.2 percent in 2022, supported by stronger domestic demand and elevated commodity prices, and is expected to reach 5.1 percent in 2023.
Thailand’s economy is expected to recover gradually over the next two years, with growth picking up in 2022 and strengthening to 4.3 percent in 2023.
At a time when governments in many developing economies lack the policy space to support activity if needed, new COVID-19 outbreaks, persistent supply-chain bottlenecks and inflationary pressures, and elevated financial vulnerabilities in large swaths of the world could increase the risk of a hard landing.
Tourism-dependent economies are not expected to recover to pre-pandemic levels until 2022 (Cambodia, Malaysia, the Philippines) or 2023 (Thailand).
Growth is projected to be 5.9 percent in the Philippines in 2022, supported by sustained public investment and recovering household consumption, and then moderate to 5.7 percent in 2023. Growth in Malaysia will rebound to 5.8 percent in 2022 as domestic demand improves amid high vaccination rates, but then ease to 4.5 percent in 2023 due to fading support from exports and tightening fiscal and monetary policies. A revival of activity because of better vaccination in Vietnam is expected to lead to a growth of 5.5 percent in 2022.
The share of vaccinated people in many economies in the region is expected to surpass 70 percent by mid-2022, but the region is vulnerable to renewed outbreaks of COVID-19. Mobility restrictions in the context of pandemic resurgence, incomplete vaccinations, and inadequate testing especially in the face of the highly transmissible Omicron variant, may disrupt the recovery of the tourism and travel industry and weigh on consumer confidence.