IMF lowered growth forecast for Asia Pacific by -0.5% to 4.9% in 2022. Inflation forecast, on the other hand, was raised by 1% to 3.4%. Anne-Marie Gulde-Wolf, acting director of the IMF’s Asia and Pacific Department, warned, “the region faces a stagflationary outlook, with growth being lower than previously expected, and inflation being higher.”
In a blog post, she also warned of three main headwinds to the outlook. An escalation of the war in Ukraine would further increase food and energy prices. A tightening of US monetary policy that is materially faster or larger than currently expected by markets—or both—would have large spillovers to Asia. Also, a greater slowdown in China’s economy due to broader virus lockdowns or other risk factors such as the continued weakness in the real estate sector, would also have large implications for the region
“More broadly, a potential fragmentation of supply chains and added geopolitical tensions will remain risks for the longer term for a region that has flourished in recent decades from rising wealth and other economic gains from globalization,” she added.
