pacific money | Economy
Most economies in the region are only just beginning to fully emerge from border closures and other pandemic-related precautions.
Economies in the Asia-Pacific are forecast to stagnate this year as decades-high inflation and the war in Ukraine compound geopolitical uncertainties and the fallout from the pandemic.
A report on Pacific Rim economies from the Asia-Pacific Economic Cooperation Forum said on Friday that growth in the region is likely to fall by more than half this year to 2.5 percent from 5.9 percent. last year, when many countries were recovering from the worst of their COVID-19. 19 buds.
Weaker growth in the US and China is a major factor behind the regional malaise, although other economies are also slowing. Russia’s economy is expected to contract due to the implications of its war in Ukraine, with the three economies accounting for almost 70 percent of the APEC region’s GDP, according to the report.
The report forecast that regional growth would only pick up slightly in 2023, to 2.6 percent.
Most economies in the region are only just beginning to fully emerge from border closures and other pandemic-related precautions. Tourists have reappeared on the streets of Bangkok, but many businesses remain closed, victims of the many months in which travel was practically at a standstill.
In China, where authorities continue to impose lockdowns to quell COVID-19 outbreaks, the economy shrank 2.6 percent in the three months ending June compared with the previous quarter after Shanghai and other cities were closed to combat coronavirus outbreaks.
The US economy shrank 0.9 percent between April and June, while Russia’s economy shrank 0.5 percent between January and June compared to a year earlier, according to its Ministry of Economic Development.
Japan’s economy shrank at an annual rate of 0.5 percent between January and March and is forecast to expand just 2 percent in the fiscal year ending March 2023.
Some economies are doing better.
Indonesia reported on Friday that its economy grew at a better-than-expected 5.4 percent annual rate in the April-June quarter as it rebounded from a wave of infections from the Omicron variant of the coronavirus.
An exporter of raw materials such as coal and palm oil, the country saw its exports rise nearly 20 percent in the last quarter as prices for many materials soared. But that windfall is likely to dissipate as price increases taper or reverse, analysts said.
“We expect slower growth in the rest of the world to take its toll… as commodity prices continue to slide. On the domestic front, the headwinds from high inflation, which has hit a seven-year high and is expected to rise further in coming months, are growing,” Alex Holmes of Oxford Economics said in a comment.
India is also growing faster than much of the rest of the region.
Reserve Bank of India Governor Shaktikanta Das projected growth to remain robust, at 7.2 percent in the financial year ending March 2023. But to offset inflation that hit 6, 7 percent in June, the central bank raised its key interest rate on Friday by half. percentage point to 5.4 percent.
More than half of APEC’s 21 members have raised rates or tightened monetary policy to counter inflation, which now averages 5.4 percent for the region, according to the APEC report.
He pointed to an overall 23 percent rise in the Food and Agriculture Organization of the United Nations Food Price Index, noting that inflation is likely to remain elevated for at least the rest of the year as that central banks adjust their policies to try to control it. .