Moody's Investors Service on Tuesday forecast that Asia Pacific's growth will rebound to 6.7 per cent in 2021 following a contraction of 0.8 per cent in 2020 as the global recovery further solidifies and pandemic containment measures relax gradually.
However, it said, the overall resiliency of the Asia Pacific economy masks a range of output losses and reflects increased divergence across the region.
Nearly 30 per cent of Asia Pacific's economies will record strong post-pandemic growth and return to pre-crisis levels of GDP by 2022 or 2023.
Moody's said economies in this group are mainly high income and have mature institutions, strong healthcare infrastructure and dynamic labour markets.
More than 40 per cent of economies in the region will have output losses exceeding 8 per cent of pre-pandemic GDP forecast levels. Most economies in this group have lower-middle incomes and deep scarring will likely lead to higher social risks.
In some of these economies, high debt burdens are limiting the fiscal space for governments to respond to the pandemic.
Deep scarring will likely lead to higher social risks for a number of economies, especially lower-income countries, where the pandemic has exacerbated preexisting trends in inequality given the disproportionate impact on employment.
Income per capita levels in a few economies will still be below 2019 levels by 2022 and a few others will be only slightly above 2019 levels.
Based on Moody's published ESG scores, labour and income are a 'highly negative risk for India, Indonesia, Sri Lanka and Bangladesh, and will have implications for other sectors.
"Notably for India, logistical challenges reaching a large rural population have complicated the vaccine rollout. The government is also constrained in its ability to provide support to the economy and population, by a high debt burden and weak debt affordability."
Overall, said Moody's, Asia Pacific will likely register faster growth this year and next than other regions like the Middle East, North Africa and Latin America.
Significantly, Covid-19 has accelerated a number of secular trends like automation and trade regionalisation, which could have longer-lasting effects on social risks and the reallocation of investments across countries, said Moody's.
( With inputs from ANI )
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