World Bank cuts Asia’s growth outlook for 2022 following war in Ukraine | Russia–Ukraine War

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The Washington-based lender forecasts 5% growth for the region this year, up from 5.4% in October.

The World Bank has downgraded its economic outlook for East Asia and the Pacific, pointing to war in Ukraine, rising inflation in the United States and slowing growth in China as risks for the growth of the region.

The region is expected to grow 5% in 2022, down from a forecast of 5.4% in October, the Washington-based lender said in a report on Tuesday.

But growth could fall to 4% if conditions worsen and governments fail to respond, the international financial institution said, calling for “bold fiscal, prudential, trade and innovation policy reforms”.

“As economies in East Asia and the Pacific recovered from the pandemic-induced shock, the war in Ukraine is weighing on growth momentum,” World Bank Vice President for Asia said. of the East and the Pacific, Manuela Ferro, in a press release.

“The region’s broadly strong fundamentals and sound policies should help it weather these storms.”

China is expected to grow 5% this year from 5.4% previously, according to the report, which notes the government’s ability to provide stimulus to offset negative shocks.

The world’s second-largest economy is slowing as ultra-tight containment measures aimed at stemming the worst outbreak of COVID-19 since the start of the pandemic weigh on production and demand.

Excluding China, the East Asia and Pacific region is expected to grow 4.8%, down from 5.2%.

In Southeast Asia, the Philippines had the best prospects, with an estimated growth of 5.7%, followed by Malaysia, Vietnam and Indonesia.

Encouraging signs

Carlos Casanova, senior economist for Asia at UBP in Hong Kong, told Al Jazeera that the World Bank’s downward revision to forecasts reflects weaker demand in China and higher energy prices. .

“It is still early to determine how disruptions to global supply chains will play out in the future, but it is safe to assume that inflation will remain above target in most Asian economies in 2022, before rising. drop in 2023,” Casanova said. “As far as China is concerned, the weaker months are still ahead of us, but we expect an inflection point in activity in June once the policy stimulus kicks in.”

Tim Harcourt, chief economist at the Institute for Public Policy and Governance at the University of Technology Sydney, told Al Jazeera there were also encouraging economic signs on the horizon.

“There are signs of easing shipping difficulties. Commodity prices are healthy. So that’s a good reason to have confidence in the World Bank forecast,” Harcourt said. “But the escalation of the Russian-Ukrainian conflict and inflationary pressures could lead to a later review.”

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