The World Bank said on Monday that the COVID-19 Delta variant is holding back the recovery in East Asia and Pacific (EAP) countries, which would give rise to economic recession and inequality in the long term.
Testing, tracking, and isolation among the public have been less effective against the more infectious Delta variant, partly driving up lockdowns and restrictions to curb the growing outbreak, the World Bank said in its East Asia and Pacific Fall 2021 Economic Update published on Sept. 27.
“The disease is damaging the economy and is unlikely to disappear in the foreseeable future,” the report reads. Findings show that the overall economic growth of the EAP region is projected at 7.5 percent.
Cambodia, Malaysia, and Mongolia are expected to reach pre-pandemic levels in output by 2022; yet the Philippines, Thailand, and many Pacific Islands would remain at lower levels in 2023, according to the document.
The growth momentum of China has eased, it said. Official data released by Beijing indicate China’s factory output growth in August hit a 13-month low, due to domestic Delta variant surges and the global supply shortage.
As a result, the regional employment rate shrank about 2 percentage points between 2019 and 2020.
Both Indonesia and the Philippines would see as many as 8 million more people struggle with poverty in 2023, said the report.
Burma (also known as Myanmar), among one of the hardest-hit, will face the biggest contraction in employment under military takeover and civil disobedience.
“While all households have suffered, poorer ones were more likely to lose income, sell off productive assets, suffer food insecurity, and lose schooling for children,” it reads.
In Indonesia, Mongolia, and the Philippines, firms lost on average at least 40 percent of their typical monthly sales and cut jobs, while micro-firms suffered most, lacking access to advanced technologies and government support, the World Bank said.
However, domestic economic activity has so far been less sensitive to infections, researchers found.
In May 2020, an infection rate of one in every 1,000 people would see a 5 percent decline in industrial output. The impact was negligible by June 2021.