IMF warns of 'stagflation' risk in Asia
The International Monetary Fund warns of possible stagflation in Asian economies.
As a result of the war in Ukraine, a rise in commodity costs, and a slowdown in the Asian economy, Asia faces a risk of "stagflation" according to the International Monetary Fund (IMF).
The Acting Director of the IMF's Asia and Pacific Department, Anne-Marie Gulde-Wolf said that Asia will be affected by higher commodity prices and slower growth in its European trading partners as a result of developments between Russia ad Ukraine.
Moreover, inflation in Asia is also starting to increase as China's economic slowdown adds to pressure on growth in the region.
"Therefore, the region faces a stagflationary outlook, with growth being lower than previously expected, and inflation being higher," Gulde-Wolf told an online news conference in Washington.
The IMF's latest forecast shows Asia's economy will expand 4.9% this year, down from the 5.4% of the previous projection made in January, while inflation in the continent is expected to reach 3.4% in 2022, 1% higher than forecast.
Gulde-Wolf explained that an escalation in Ukraine, new Covid-19 waves, additional US Federal Reserve interest rate hikes, and lockdowns in China are all factors that risk the outlook to Asia's growth.