Russia’s Ukraine invasion is likely to further hinder the economic growth of Asia and the Pacific region in 2022, the World Bank has warned.
The Washington-based lender, in its report on Tuesday, said it expected growth in the developing East Asia and Pacific (EAP) region for 2022 to expand by five per cent, lower than its 5.4 per cent estimate in October.
But growth could slow to four per cent if conditions worsened and government policy responses were weaker, the report stated.
Disruption of supply, increasing financial stress and dampening global growth in the wake of Russia’s invasion, which began on 24 February, will result in higher poverty in the EAP region, the report said.
The region, stretching from China to Papua New Guinea, has also been facing multiple financial crises due to the ongoing pandemic and financial tightening in the US.
China’s economy is expected to grow five per cent in 2022, down by 0.4 per cent from the October estimate, the report said, noting the Communist Party government’s capacity to provide stimulus to offset adverse shocks, reported Reuters.
In 2021, China’s economy grew by 8.1 per cent, while the rest of the region grew by 2.6 per cent.
“The region confronts a triad of shocks which threaten to undermine its growth momentum,” said World Bank East Asia and Pacific chief economist Aaditya Mattoo.
He added that the war has led to a spike in food and fuel prices adding to the global financial volatility.
According to the report, growing debt will limit the capacity to provide fiscal support and rising inflation amid tightening global financial conditions will further shrink space for monetary easing.
However, the war’s impact on economies in the region would vary depending on their exposure and resilience, Mr Mattoo said. Excluding China, output in the rest of the region is projected to expand 4.8 per cent this year.
The war on Ukraine is weighing on growth momentum, just as the economies were recovering from the pandemic-induced shock, World Bank vice president for East Asia and Pacific Manuela Ferro said.
“The region’s largely strong fundamentals and sound policies should help it weather these storms,” Ms Ferro said in a statement.
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