Manila, Philippines ,As a result of Russia’s invasion of Ukraine, the Asian Development Bank cut its forecast for developing Asia’s growth in 2022. It said that “growing” prices pressures could hurt the region as it comes back from the Omicron spike.
Inflation was expected to rise across a huge area that went from the Cook Islands in the Pacific to Kazakhstan in Central Asia, the report said. As countries recovered from the pandemic and energy and food prices rose, inflation was expected to rise.
As more people got sick with coronaviruses because of Omicron and the conflict in Ukraine, the Philippines-based lender cut its economic growth forecast for 2022 to 5.2 percent.
This is compared to the 5.3 percent growth forecast in December and the 6.9 percent growth that happened last year, which were both right on track.
While the bank was hopeful about the region’s recovery from COVID-19, chief economist Albert Park warned that the recovery would be “uneven” and that “substantial downside risks” existed.
“What is clear is that the war’s repercussions add another challenge to economies in underdeveloped Asia already recovering from the epidemic,” Park added.
Because of their economic and financial ties to Russia, the Caucasus and Central Asia would be directly affected by the Ukraine crisis. The rest of the area would be affected by rising food and energy prices, but not directly because of the crisis.
The bank said in its biennial Asian Development Outlook study that energy prices for energy importers would increase, raising inflation and weighing on demand.
Inflation was forecast to reach 3.7 percent in 2021, up from 2.5 percent in 2021, Park observed, which was “still substantially below” other regions of the globe, which he ascribed in part to decreased wheat consumption and fewer supply chain disruptions.
However, he warned that “price pressures are rising in developing Asia, and monetary authorities must be on the lookout.”
It also made things more complicated because the US Federal Reserve started raising interest rates, which made things more complicated. It was trying to stop a rise in inflation that could have slowed down the economic recovery.
Recently, strong US employment data raised hopes for a swift rate rise. According to the Asian Development Bank, this might result in “financial market turbulence, quick capital outflows, and dramatic currency devaluation.”
The bank added that the danger of more lethal forms of COVID-19 continues to cast a shadow over developing Asia, with the Omicron epidemic affecting regional development and supply networks.
When it comes to 2022’s growth, the Caucasus and Central Asia were expected to have the worst rate at 3.6%, down from 5.6% growth in 2021.
As the COVID-19 virus spreads in China, the rate of growth in East Asia is expected to drop from 7.6 percent to 4.7 percent per year, down from 7.6 percent last year.
Crisis hit Sri Lanka’s GDP was forecast to increase by 2.4 percent, the slowest rate in South Asia, where the economy is predicted to develop at a 7.0 percent clip.
