A World Bank report on Monday warned that the war in Ukraine threatens to slow down economies in Asia in the coming months. Commodity supplies, economic pressures and higher prices will exacerbate problems for people and businesses in the Asia-Pacific region, the report predicted. FILE: A man watches a screen showing a news story with Russian President Vladimir Putin on the facade of the Bombay Stock Exchange (BSE) building in Mumbai, India, on Thursday, February 24, 2022. (AP Photo / Rafiq Maqbool, Archive) Growth in the region is estimated at 5%, or less than almost half the percentage point expected in October. The “low incident” scenario, he said, predicts a drop in growth to 4%. The region experienced a 7.2% growth recovery in 2021, as many economies experienced declines with the onset of the pandemic. RUSSIA INVASES UKRAINE: LIVE UPDATES The World Bank expected China, the region’s largest economy, to expand at an annual rate of 5%, much slower than the 8.21% growth in 2021. Russia’s invasion of Ukraine has helped boost prices for oil, gas and other commodities, boosting household purchasing power and burdening businesses and governments already facing unusually high debt levels due to the pandemic, the report said. The Development Credit Institution has urged governments to lift restrictions on trade and services to take advantage of more trade opportunities and end fossil fuel subsidies to encourage the adoption of more green energy technologies. ARCHIVE – A man wearing a face mask to help curb the spread of coronavirus walks on a bridge in Tokyo, March 25, 2022. (AP Photo / Hiro Komae, Archive) “The succession of the shocks means that the growing economic pain of the people will have to deal with the shrinking economic power of their governments,” said Aaditya Mattoo, the World Bank’s chief economist for East Asia and the Pacific. “A combination of fiscal, financial and trade reforms could mitigate risks, revitalize growth and reduce poverty.” The report also highlighted the change in US monetary policy and the slowdown in China as other reasons for possible shocks in the region.
BIDEN ADMINISTRATION TO IMPOSE NEW SANCTIONS IN RUSSIA THAT PROHIBITS ALL NEW INVESTMENTS IN RUSSIA As the US Federal Reserve raises interest rates to cool the US economy and curb inflation, many Asian economies are still lagging behind in recovering from the pandemic. The World Bank has said that countries such as Malaysia may experience currency outflows and other economic impacts from these changing policies. Meanwhile, China’s already slowing economy could falter as COVID-19 cases cause a lockdown like the one now in Shanghai, the country’s largest city. This is likely to affect many Asian countries whose trade is based on demand from China. “These crises are likely to exacerbate existing post-COVID difficulties,” the report said. The 8 million households whose members fell back into poverty during the pandemic “will see real incomes shrink even further as prices soar.” ARCHIVE – Shoppers visit a popular retail street in Beijing on Saturday, February 26, 2022. (AP Photo / Ng Han Guan) “Microeconomic misery must tackle macroeconomic stinginess,” the report said. “Over-indebted governments, which see their debt as a share of GDP growing by ten percentage points from 2019, will strive to provide financial support.” CLICK HERE TO DOWNLOAD THE FOX BUSINESS APPLICATION The report noted that regional economies did better during the waves of the 2021 Delta variant of the coronavirus compared to the first months of the pandemic in 2020, mainly because fewer restrictions were imposed and extensive vaccinations helped reduce the severity of outbreaks. The Associated Press contributed to this report.