The downgrade, which contrasted with an upward revision in the IMF's forecast for advanced nations, highlights the divergence emerging across countries on the pace of recovery from pandemic-induced strains.

In an update to its World Economic Outlook (WEO), the IMF forecast emerging Asia will grow 7.5% this year, down 1.1% points from its previous projection made in April.

That was a much bigger downgrade than a 0.4 point mark-down for emerging economies across the globe.

"Growth prospects in India have been downgraded following the severe second COVID wave during March-May and expected slow recovery in confidence from that setback," the IMF said.

"Similar dynamics are at work in the ASEAN-5 group...where recent infection waves are causing a drag on activity," it said.

The IMF cut this year's growth forecast for India by 3.0 points to 9.5%. The projection for the ASEAN-5 group consisting of Indonesia, Malaysia, the Philippines, Thailand and Vietnam was marked down by 0.6 point to 4.3%.

China's 2021 forecast was revised down 0.3 point to 8.1% due to a slowdown in public investment and fiscal support.

For 2022, the IMF raised the growth forecast for emerging Asia by 0.4 point to 6.4%.

Southeast Asia has become a global epicentre for the contagious Delta variant of the coronavirus, forcing countries to impose travel bans and lockdown measures that are dragging on growth.

"We expect renewed virus outbreaks and a subsequent retightening in restrictions to delay the economic recovery, particularly in South East Asia," Oxford Economics said in a research note.

"Low vaccination rates outside of China and Singapore also leave many in the region vulnerable to COVID-19 setbacks and the risk that the extent of economic scarring is much greater than we currently project," it said.

(Editing by Jacqueline Wong)

By Leika Kihara