East Asia’s 2022 Growth Forecast Slashed By World Bank Due To Ukraine War

East Asia's 2022 Growth Forecast Slashed By World Bank Due To Ukraine War
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The impact of the Russian invasion of Ukraine was reflected in a recent projection of the World Bank as the global banker slashed its forecast for the economic growth of East Asia and the Pacific region for 2022.

The bank warned that if the Ukraine crisis turns for the worst, further economic growth loss would hit the region further.

The World Bank now expects the economic growth for 2022 for the developing East Asia and Pacific (EAP) region, which interestingly also includes China, to be only about 5.0% which is a drop from the 5.4% growth rate for the region that it had previously forecast in October, the Washington-based lender said in a report on Tuesday.

However, the bank warned that if the Ukraine situation worsened further and if the consequent government policy responses were weak, the economic growth of the region could further slow down to 4.0%.

The World Bank expects the growth rate of the Chinese economy to be at 5.0% for the current year which is lower than its previous estimate of a growth rate of 5.4% for the country, the global lender said while noting the ability of the Chinese government to provide fiscal stimulus to the economy to negate or reduce adverse economic shocks.

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“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.

According to Mattoo, the Russian invasion of Ukraine was the “most serious risk” to the economic growth outlook for the region, and the crisis is resulting in an increase in prices for food and fuel, increasing financial volatility while reducing confidence all over the world.

According to Mattoo, Russia’s invasion of Ukraine is particularly concerning because the region is still dealing with the consequences of the Covid-19 outbreak, a structural slowdown in China, and higher inflation, which could trigger faster monetary tightening in the United States.

According to Mattoo, the war’s impact on East Asian and Pacific economies will vary based on their exposure and resilience. The rest of the area, excluding China, is expected to grow at a rate of 4.8% this year.

“Just as the economies of East Asia and the Pacific were recovering from the pandemic-induced shock, the war in Ukraine is weighing on growth momentum,” World Bank Vice President for East Asia and Pacific Manuela Ferro said in a statement.

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

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