WASHINGTON DC, April 26 – The shock from the ongoing war between Russia and Ukraine came in even before the global economies could recover from the impact of the Covid-19 pandemic, said Anne-Marie Gulde, International Monetary Funds’s Acting Director, Asia and Pacific Department.
While Asia has a relatively small direct trade and financial exposure to Russia and Ukraine, the region’s economic growth outlook like the rest of the world will be shaped by the ongoing war between Russia and Ukraine, she said at an IMF press conference on the Economic Outlook For Asia and Pacific, broadcast live here today.
The impact on the Asian economies will be due to the higher commodity prices and slower growth in its European trading partners,
Asia’s inflation had been relatively low during the pandemic but it has started rising with the spike in food and fuel prices that followed the Russia-Ukraine war, said Gulde, adding that the shock from the war had come at a time when recovery from the Covid-19 pandemic was still incomplete while global financial conditions were still tightening.
Amid this, policy makers in the region must hit a balance between the need to support an incomplete recovery while responding to rising inflation amid tightening global financial conditions and high debt levels, she said.
New Covid rates are further stressing many countries, notably China. Its lower growth is affecting many trading partners in Asia while monetary tightening in advanced countries is affecting the interest rates in Asia, while high debts are making recoveries even more difficult for some of the emerging and developing economies in the region.
All these have taken place at a time when policy space to respond is limited, she said, adding that the region’s policymakers will face difficult trade offs as they set out economic reforms to bring back growth and protect the vulnerable from rising fuel and food costs.
Last week the IMF projected global growth to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023.