new Delhi: Commodity supply disruptions, financial stress and rising prices are among the effects of the Russia-Ukraine war, which will slow economies in Asia, including India, in the coming months, the World Bank said in a report on Tuesday.
Citing the World Bank report, the AP news agency said that slow growth and rising poverty due to several constraints in the Asia-Pacific region this year have added to the hardships for people and businesses.
The report suggested that growth for the sector is projected to be 5 percent, down from the original forecast of 5.4 percent. In the worst-case scenario, the growth could fall even further to 4 per cent, it said.
The Asia-Pacific region saw growth of 7.2 percent in 2021, when many economies experienced recession with the onset of the COVID-19 pandemic.
The World Bank has projected that China, the region’s largest economy, will expand at a 5 percent annual pace, much slower than the 8.1 percent growth expected in 2021.
The report noted that due to the Russian invasion of Ukraine, prices of crude oil, gas and other commodities increased, increasing domestic purchasing power and burdening businesses and governments that already grapple with unusually high levels of debt. are.
Development lending institutions have urged governments of all countries to lift restrictions on trade and services to take advantage of more business opportunities and eliminate fossil fuel subsidies to encourage the adoption of more green energy technologies. Can you
According to Aditya Mattoo, the World Bank’s chief economist for East Asia and the Pacific, the continuing shocks mean people’s growing economic pain will have to be countered by the shrinking financial capacity of their governments.
A combination of fiscal, financial and trade reforms can reduce risk, revive growth and reduce poverty.
The World Bank report pointed to three major potential setbacks for the region: war, monetary policy changes in the US and some other countries, and a slowdown in China.
While rising interest rates make sense to cool the US economy and curb inflation, much of Asia is lagging behind in its recovery from the pandemic.
China’s economy is already slowing, and it could falter as the COVID-19 outbreak provokes new lockdowns in Shanghai, as is now. This is likely to impact many Asian countries, whose trade depends on demand from China. The report said that these constraints may add to the existing post-Covid difficulties.
The report mentions about 80 lakh households, whose members fell into poverty during the pandemic, with the real income going down even further due to the price rise.
The World Bank report said that countries with an average vaccination rate of 1 percentage point higher had higher growth rates.