The World Bank lowered its growth forecast for East Asia and the Pacific by 2022 to reflect the economic consequences of the Russian invasion of Ukraine, and warned that the region could lose more momentum if the situation worsened.
The Washington-based lender said in a report on Tuesday that it expects growth in the growing East Asia Pacific (EAP) region, which includes China, by 5.0 percent in 2022, less than its October forecast of 5.4 percent. .
But growth could slow to 4.0 percent as conditions worsen and government policy responses weaken, the World Bank said.
The Chinese economy is expected to grow 5.0 percent this year from a previous estimate of 5.4 percent, signaling its government's ability to provide incentives to offset the shocks.
"The region is facing a triad of shocks that threaten to undermine its growth momentum," said Aaditya Mattoo, the World Bank's chief economist for East Asia and the Pacific. The war between Russia and Ukraine, which Mattoo said was "the most serious risk" to the region's prospects, has led to rising food and fuel prices, financial instability and declining confidence around the world.
Mattoo said the Russian invasion of Ukraine is particularly worrying because the region is still struggling with the effects of the COVID-19 pandemic, a slowdown in China's structure and faster inflation leading to a sharp rise in the US currency could float.
The impact of the war on the East Asian and Pacific economies will vary depending on their exposure and resilience, Mattoo said. With the exception of China, production in other parts of the region is expected to increase by 4.8 percent this year.
"As the East Asian and Pacific economies recover from the shock pandemic, the war in Ukraine is on the rise," Manuel Ferro, World Bank's vice president for East Asia and the Pacific, said in a statement. "Most strict regional standards and sound policies should help deal with these storms."
(Source: // Reuters)