Most countries in the region are just starting to fully recover from border closures and other pandemic-related precautions.
The economies of the Asia-Pacific region are forecast to plunge into depression this year, as high inflation in recent decades and the war in Ukraine exacerbate geopolitical uncertainty and the effects of the pandemic.
The Asia-Pacific Economic Cooperation Forum report on the economies of the Asia-Pacific region says that growth in the region is likely to fall by more than half this year to 2.5% from 5.9% last year, when many countries recovered from the worst effects of COVID-19. 19 flashes.
Weaker growth in the US and China is a major factor behind the region’s malaise, although other economies are also slowing down. Russia’s economy is expected to shrink due to the effects of its war in Ukraine, and the three economies account for almost 70 percent of the APEC region’s GDP, the report said.
The report predicts that regional growth will pick up only modestly in 2023, to 2.6 percent.
Most countries in the region are just starting to fully recover from border closures and other pandemic-related precautions. Tourists have resurfaced on the streets of Bangkok, but many businesses remain closed, the victims of months when travel was virtually paralyzed.
In China, where authorities are still enacting lockdowns to contain outbreaks of COVID-19, the economy contracted 2.6% in the three months ended June compared to the previous quarter after Shanghai and other cities were closed to control outbreaks. coronavirus.
According to the Department of Economic Development, the US economy contracted 0.9% in April-June, while the Russian economy contracted 0.5% in January-June compared to last year.
Japan’s economy contracted 0.5% year-on-year in January-March and is projected to grow by just 2% in the fiscal year ending March 2023.
Some economies are doing better.
On Friday, Indonesia reported that its economy grew better-than-expected at 5.4 percent year-on-year in April-June as it recovered from a wave of Omicron coronavirus infections.
An exporter of raw materials such as coal and palm oil, the country’s exports increased nearly 20 percent in the latest quarter as prices for many materials soared. But this windfall is likely to dissipate as price growth slows or subsides, analysts say.
“We expect the slowdown in the rest of the world to take its toll… as commodity prices continue to decline. On the home front, headwinds are picking up due to high inflation, which has reached a seven-year high and will continue to rise in the coming months,” said Alex Holmes of Oxford Economics in a comment.
India is also growing faster than much of the rest of the region.
Reserve Bank of India Governor Shaktikanta Das predicted that growth would remain robust at 7.2 percent in the fiscal year ending March 2023. percentage point to 5.4 percent.
More than half of APEC’s 21 members have raised rates or otherwise tightened monetary policy to counter inflation, which currently averages 5.4 percent across the region, the APEC report said.
He pointed to a 23 percent overall increase in the Food and Agriculture Organization’s food price index, noting that inflation is likely to remain high until at least the end of the year as central banks adjust their policies in an attempt to bring it under control. .