(Bloomberg) -- The Asian Development Bank cut economic growth forecasts for developing Asia, as the emergence of the omicron variant and rising coronavirus infections globally show the pandemic is far from over.

The region’s gross domestic product will expand 7% this year, down a notch from the 7.1% forecast in September, the ADB said in its Asian Development Outlook Supplement released Tuesday. The expansion will mark a course reversal from last year’s 0.1% contraction, and will moderate to 5.3% in 2022 -- slower than the 5.4% previously estimated.

“Developing Asia is expected to sustain its strong rebound as envisaged in September,” the Manila-based lender said. Yet, the “recent emergence of the highly mutated omicron coronavirus variant is a sobering reminder that further outbreaks remain a possibility,” it said.

China, the region’s largest economy, is expected to grow more slowly by 8% in 2021 and 5.3% in 2022. India’s forecast is lowered to 9.7% for fiscal year that began April 1, 2021. Southeast Asia’s outlook has also been cut to 3% for 2021 amid expectations of slower growth in Malaysia and Vietnam.

Beijing’s Covid-zero approach could severely disrupt economic activity, while new infection waves could reverse reopening in many nations, the ADB said. Travel restrictions also damp growth prospects for tourism-dependent economies, it said. 

Other key points from the report:

• Regional inflation remains manageable, with the forecast revised down to 2.1% for 2021 and unchanged at 2.7% for 2022, which will allow monetary policy to stay supportive
• Still, upside risks to inflation could prompt the U.S. to tighten monetary policy earlier and trigger financial volatility
• Most economies in developing Asia have ramped up their vaccine rollouts, but progress still varies considerably

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