The war in Ukraine will have a negative impact not only on the economy of Europe, but also on the East Asian region. The World Bank has released an economic outlook that projects weaker growth in its economies this year.
While as recently as October the World Bank had projected that the East Asia-Pacific economy would grow by 5.4 percent this year, it has now revised its forecast downwards. Gross domestic product in the region is expected to rise by as much as five percent. The forecast also applies to the largest economy in East Asia, China. It is also expected to grow at a five-percent rate this year, which is also 0.4 percentage points weaker than originally expected.
The World Bank’s back door
But even that may not be the final forecast, the World Bank has left its back door open. “If conditions deteriorate and the response of government policies is weak, growth may fall to four percent,” the World Bank added. It will depend mainly on China, which is the driver of the region.
What are the risks?
“The region is facing a series of shocks that increase the risk that economic growth will weaken,” Aaditya Mattoo, chief economist at the World Bank’s East Asia office, told Reuters. The biggest risk, he said, is the continuation of the Russian-Ukrainian war, which is driving up food and energy commodity prices.