In its latest East Asia and the Pacific Economic Update, the World Bank said that while there are still some growth opportunities in the fields of trade, digital technology, and green manufacturing, Asia-Pacific economic growth is poised to slow down this year.
Russian aggression in Ukraine, sanctions imposed on Russia by the West, financial tightening in the US, and structural slowdown in China will affect Asia-Pacific economies.
The region’s economic growth forecast for this year has been slashed from 5.4% to 5%, and in a low case scenario, to 4%, the World Bank said. Last year, the region saw a rebound to 7.2% growth as the economies started to recover after the global COVID-19 pandemic.
Russia’s invasion of Ukraine and the subsequent sanctions on Russia could affect the Asia-Pacific region by disrupting the supply of commodities, increasing financial stress and reducing global confidence.
The region’s direct dependence on Russia and Ukraine through imports and exports of goods, services, and capital is limited, the World Bank adds, but consumers and economic growth will be affected by the worldwide increase in food and fuel costs.
The US monetary policy of sharply increasing interest rates to curb inflation and slower than expected economic growth in China are among the other shocks hampering recovery and economic growth in the Asia-Pacific region, according to the World Bank.