Asian region facing ‘stagflationary outlook’ amid Ukraine war: IMF

Asian region facing ‘stagflationary outlook’ amid Ukraine war: IMF

WASHINGTON: Asian nations, like the rest of the world, are being battered by countervailing forces such as the war in Ukraine that are raising prices while holding back growth, the IMF said Monday. “The region faces a stagflationary outlook, with growth being lower than previously expected, and inflation being higher,” said Anne-Marie Gulde-Wolf, acting director of the IMF’s Asia and Pacific Department. The regional outlook, which follows the World Economic Outlook released last week, shows the growth forecast for Asia was cut to 4.9 percent, impacted by the slowdown in China, which is having ripple effects on other closely-linked economies.

Inflation is now expected to rise 3.2 percent this year, a full point higher than expected in January, she said. “Despite the downgrade, Asia remains the world’s most dynamic region, and an important source of global growth,” Gulde-Wolf said in remarks prepared for delivery to a press briefing.

But the Russian invasion of Ukraine and Western sanctions on Moscow have driven up food and fuel prices worldwide, while major central banks are raising interest rates to combat inflation, which will pressure countries with high debt loads. A larger-than-expected slowdown in China due to prolonged or more widespread COVID-19 lockdowns or a longer-than-expected slump