The World Bank said Asian countries may have to deal with three major economic shocks this year – events in Ukraine, a sharp recession in China and a rate hike by the US Federal Reserve, writes CNN.
The Development Bank cut its 2022 growth forecast for East Asia and the Pacific (EAP) to 5% from 5.4% and warned that growth could fall to 4% if conditions worsen further, leaving an additional 6 million people will be trapped in poverty.
He also downgraded China’s growth forecast, estimating that the world’s second-largest economy will grow just 5% this year, sharply below last year’s 8.1%. It’s also below China’s official target of around 5.5%.
“While the East Asia region has weathered the occasional storms of Covid-19, three clouds are gathering over the economic horizon, which will mean lower economic growth and higher levels of poverty,” says the latest World Bank report on the region. The World Bank said higher US rates are likely to trigger an outflow of capital from developing countries and put pressure on their currencies, causing a “premature” financial tightening and hurting growth