MANILA, April 6 – The Asian Development Bank lowered its 2022 growth forecast for developing Asia on Wednesday as “increasing” price pressures following Russia’s invasion of Ukraine threaten a recovery after Omicron’s pushes.
Inflation in the vast region stretching from the Cook Islands in the Pacific to Kazakhstan in Central Asia is expected to accelerate as countries recover from the pandemic and energy and food costs rise, a- he declared.
Following the spike in coronavirus infections caused by Omicron and the conflict in Ukraine, the Philippines-based lender lowered its economic growth forecast for 2022 to 5.2%.
That compares to its previous forecast of 5.3% in December and the 6.9% growth recorded last year.
While the bank was optimistic the region would continue to rebound from Covid-19, chief economist Albert Park said the recovery would be “uneven” and there were “significant downside risks”.
“What is certain is that the fallout from the war is an additional hurdle for the economies of developing countries in Asia that are still struggling with the pandemic,” Park said.
While the Caucasus and Central Asia would be directly affected by the Ukraine crisis due to their close trade and financial ties with Russia, the rest of the region would be indirectly affected by rising food and energy prices. .
“Energy bills will rise for energy importers, driving up inflation and weighing on demand,” the bank said in its flagship Asia Development Outlook report.
Inflation is expected to hit 3.7%, down from 2.5% in 2021, which Park said was “still much lower” than other parts of the world, which he partly attributed to relatively low consumption. lower wheat and fewer supply chain disruptions.
But he warned that in developing Asia “price pressures are mounting and monetary authorities must remain vigilant”.
The outlook was also clouded by the US Federal Reserve, which began raising interest rates in a bid to curb the surge in inflation that threatened to derail the economic recovery.
A recent strong US jobs report has heightened expectations of an aggressive rate hike. The Asian Development Bank warned that this could trigger “financial market volatility, rapid capital outflows and sharp currency depreciations”.
Covid-19 still casts a shadow over developing Asia, with the risk of more deadly variants emerging and the outbreak of Omicron in China threatening regional growth and supply chains, the bank said.
The Caucasus and Central Asian countries are expected to register the slowest growth, with 3.6% in 2022, compared to 5.6% in 2021.
East Asia is expected to see growth of 4.7%, up from the blistering pace of 7.6% last year, as China slows in the grip of a growing Covid-19 epidemic.
Crisis-hit Sri Lanka is expected to grow by 2.4% – the worst performance in South Asia where the economy is expected to grow by 7.0%. —AFP