Asian region facing ‘stagflationary outlook’ amid Ukraine war: IMF

WASHINGTON: Asian nations, like the remainder of the world, are being battered by countervailing forces such because the battle in Ukraine which are elevating costs whereas holding again progress, the IMF mentioned Monday. “The region faces a stagflationary outlook, with growth being lower than previously expected, and inflation being higher,” mentioned Anne-Marie Gulde-Wolf, appearing director of the IMF’s Asia and Pacific Department. The regional outlook, which follows the World Economic Outlook launched final week, reveals the expansion forecast for Asia was reduce to 4.9 p.c, impacted by the slowdown in China, which is having ripple results on different closely-linked economies.

Inflation is now anticipated to rise 3.2 p.c this 12 months, a full level larger than anticipated in January, she mentioned. “Despite the downgrade, Asia remains the world’s most dynamic region, and an important source of global growth,” Gulde-Wolf mentioned in remarks ready for supply to a press briefing.

But the Russian invasion of Ukraine and Western sanctions on Moscow have pushed up meals and gas costs worldwide, whereas main central banks are elevating rates of interest to fight inflation, which is able to stress international locations with excessive debt masses. A bigger-than-expected slowdown in China because of extended or extra widespread COVID-19 lockdowns or a longer-than-expected droop within the property market presents “a significant risk for the region.”

“This a challenging time for policymakers as they try to address pressures on growth and tackle rising inflation,” the IMF official mentioned, noting that the headwinds will exacerbate the harm from the COVID-19 pandemic. Outlooks range throughout the area, relying on international locations’ reliance on imported vitality and hyperlinks to China, with progress in Pacific island nations slowing sharply, whereas Australia noticed a slight improve, she mentioned.

Governments will want robust responses, beginning with focused support to poor households most harmed by larger costs, the IMF mentioned. Many might want to tighten financial coverage amid rising inflation, whereas these with excessive debt masses could have to chop spending and even search debt aid, the fund economists mentioned in a weblog put up.

“Slower growth and rising prices, coupled with the challenges of war, infection and tightening financial conditions, will exacerbate the difficult policy trade-off between supporting recovery and containing inflation and debt,” the weblog mentioned. – AFP


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