A worker wearing a face mask works on a production line manufacturing bicycle steel rim at a factory in Hangzhou, Zhejiang province, China March 2, 2020. China Daily via REUTERS

The International Monetary Fund cut its growth forecast for the Asia-Pacific region due to a surge of the delta variant of Covid-19 and lagging vaccinations.

The Washington based fund now expects the region to grow 6.5% this year — down 1.1 percentage points from its April outlook, but still the world’s fastest growing area. The regional economy is expected to expand 5.7% in 2022, higher than its April forecast.

“Slower vaccination in Asia is one of the key factors for the slowdown in Asia’s growth momentum this year,” Changyong Rhee, director of the IMF’s Asia and Pacific Department, said in a release.

Much of the downgrade was due to slower growth in India, which is now forecast to expand 9.5% this year, and South East Asia, where the virus continues to wreak havoc. The projection for Japan was cut to 2.4% and Australia’s was lowered to 3.5%, while the outlooks for South Korea and New Zealand were raised to 4.3% and 5.1%, respectively.

China’s forecast was trimmed to 8% from 8.4% to reflect ongoing outbreaks of the virus, fiscal policy tightening and stresses in the property sector.

“While our baseline projections reflect the effects of financial tightening on real-estate investment in 2021, there are risks, given the large role that real estate sector plays in China’s economy and financial system, and we are watching developments closely,” Rhee said in the statement. — Bloomberg