World Bank cuts East Asia GDP forecast for 2022 over war in Ukraine

MANILA (Reuters) – The World Bank has lowered its growth forecast for East Asia and the Pacific for 2022 to reflect the economic impact of Russia’s invasion of Ukraine, warning that the region could lose momentum if conditions worsen.

The Washington-based lender said in a report Tuesday that it expects 2022 growth in the developing East Asia and Pacific (EAP) region, which includes China, to increase. of 5.0%, lower than its 5.4% forecast in October.

But growth could slow to 4.0% if conditions worsen and government policy responses are weaker, the World Bank said.

China’s economy is expected to grow 5.0 percent this year, down from a previous estimate of 5.4 percent, he said, noting his government’s ability to provide stimulus to offset negative shocks.

“The region faces a triad of shocks that threaten to undermine its growth momentum,” said Aaditya Mattoo, chief economist for East Asia and the Pacific at the World Bank.

The war between Russia and Ukraine, which Mattoo said was the “most serious risk” to the region’s growth prospects, is leading to higher food and fuel prices, financial volatility and loss trusted around the world.

Mattoo said Russia’s invasion of Ukraine was more concerning given that the region was still grappling with the effects of the COVID-19 pandemic, a structural slowdown in China and faster inflation that could lead to faster US monetary tightening.

The impact of war on economies in East Asia and the Pacific will vary depending on their exposure and resilience, Mattoo said. Excluding China, production in the rest of the region is expected to increase by 4.8% this year.

“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.”

(Reporting by Karen Lema; Editing by Ed Davies)

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