The latest World Bank report released Tuesday (5/4) said the war in Ukraine would slow down Asian economic growth.
Disruption of commodity supply, financial tensions and higher prices are some of the factors causing Asia's economic growth to slow.
The World Bank also predicts that there will be an increase in poverty rates in the Asia-Pacific region this year. This condition will become a new problem for the community and the business ecosystem.
Reporting from the Associated Press, the World Bank previously estimated that Asia's economic growth this year would be 5%, down from the initial estimate of 5.4%.
However, through various scenarios that might occur in the future, the World Bank then lowered its estimate to only 4%.
Before the war broke out in Ukraine, the region had rebounded to 7.2% growth in 2021.
The biggest economic power in Asia, namely China, even grew only 5%. China's economic growth this year is much slower than last year's 8.1 percent.
The World Bank report clearly states that Russia's invasion of Ukraine has played a role in increasing the price of oil, gas and other commodities.
This has put pressure on the purchasing power of households, as well as burdening businesses and governments, which are already facing exorbitantly high debt levels due to the Covid-19 pandemic.
The World Bank underlined three things that have the potential to slow down Asian economic growth. Namely, the war, changes in monetary policy in the US and several other countries, as well as China's economic slowdown.
The World Bank sees that most Asian countries are still lagging behind in their recovery from the pandemic. This condition also applies to China, which is starting to feel new pressure from the lockdown decision in Shanghai, the country's largest city.
The slowing economic conditions will be even more shaky with the emergence of a new wave of Covid-19. If it continues, this situation will affect many Asian countries whose trade depends on demand from China.
"This shock is likely to exacerbate post-Covid hardships. The 8 million households who fell into poverty during the pandemic, will see real incomes shrink even further as prices soar," the World Bank report said.
The World Bank report noted that the Asian economy in general had outperformed during last year's delta variant wave. On average, countries with 1 percentage point higher vaccination rates also have higher economic growth.
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