Pacific rim economies in slump, undermined by inflation, war | Health, medicine and fitness

By ELAINE KURTENBACH – AP Business Writer

BANGKOK (AP) — Asia-Pacific economies are expected to slump this year as decades of high inflation and the war in Ukraine exacerbate geopolitical uncertainties and the aftermath of the pandemic.

A report on the economies of the Pacific Rim by the Asia Pacific Economic Cooperation forum said Friday 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 of their COVID-19 outbreaks.

Weaker growth in the US and China is a major factor behind the regional slump, although other economies are slowing as well. The Russian economy is expected to contract due to the fallout from the war in Ukraine, and the three economies account for nearly 70% of the APEC region’s GDP, the report said.

The report forecast that regional growth would only pick up slightly in 2023, to 2.6%.

Most economies in the region are just beginning to fully escape border closures and other pandemic-related precautions. Tourists have once again appeared on the streets of Bangkok, but many businesses remain closed, victims of the many months when travel was virtually paralyzed.

In China, where authorities are still imposing lockdowns to eradicate COVID-19 outbreaks, the economy shrank by 2.6% in the three months ending in June compared to the previous quarter after Shanghai and other cities were closed to outbreaks fight against coronavirus.

According to the Ministry of Economic Development, the US economy shrank by 0.9% in April-June, while the Russian economy shrank 0.5% in January-June compared to a year earlier.

The Japanese economy shrank 0.5% year-on-year in January-March and is expected to grow by just 2% in the fiscal year ending March 2023.

Some economies are doing better.

Indonesia reported Friday that its economy grew better-than-expected in the April-June quarter at 5.4% year-on-year, after it recovered from a spate of ommicron-variant coronavirus infections.

An exporter of commodities such as coal and palm oil, the country saw its exports rise nearly 20% in the last quarter as prices for many materials rose. But that windfall is likely to fade as price increases slow or reverse, analysts say.

“We expect slowing growth in the rest of the world to take its toll… as commodity prices continue to fall. On the domestic front, headwinds from high inflation, which have reached their seven-year high and are set to rise in the coming months, are mounting,” Alex Holmes of Oxford Economics said in a commentary.

India is also growing faster than much of the rest of the region.

Reserve Bank of India Governor Shaktikanta Das predicted growth would remain robust at 7.2% in the fiscal year ending March 2023. But to curb inflation that reached 6.7% in June, The central bank raised its key interest rate by half on Friday. percentage point to 5.4%.

According to the APEC report, more than half of the 21 APEC members have raised rates or otherwise tightened monetary policy to curb inflation, which now averages 5.4% for the region.

It pointed to an overall 23% rise in the UN Food and Agriculture Organization’s food price index, noting that inflation is likely to remain high for at least the rest of the year as central banks adjust their policies to try to keep it up. to get under control.

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