The economic growth prospects in this part of the world are far from upbeat. The economic conditions, as the Asian Development Bank views them, could worsen as the war in Ukraine and global supply chain disruptions inflate prices.
The financial institution, as a result, lowered its 2022 growth forecast to 4.6 percent from the estimate of 5.2 percent it made in April and the 6.9-percent expansion registered by developing Asia in 2021. The ADB also raised its inflation forecast for the region this year to 4.2 percent from 3.7 percent because of soaring food and fuel prices.
The ADB is wary over the impact of the slowdown in global growth on Asia’s economies. Reduced demand from the developed economies, such as the US, Europe and China, will hurt exports and the manufacturing sector of poorer nations in Asia.
High prices are buffeting Asian consumers from Central Asia to the southern part of the continent as the Ukraine conflict continues to disrupt the flow of commodities, like oil and wheat.
The bank warned: “A worsening fallout from the war in Ukraine could lead to a further surge in global energy and commodity prices, with likely knock-on effects on growth and inflation in developing Asia.”
The COVID-19 lockdowns in China, the second biggest economy in the world, are not helping the rest of Asia. Nations relying on exports to China will see reduced foreign exchange earnings due to lower demand from Chinese consumers.
The strong US dollar will also subsequently increase further the cost of imports, including oil, in this side of the world and worsen the inflation rate in the region.
Fortunately, the Philippines is not facing a bleaker economic outlook than most of Asia. The ADB even raised its growth estimate for the Philippines this year to 6.5 percent from an earlier target of 6 percent.
It noted that the relaxation of COVID-19 mobility restrictions in the country and the expansion of the COVID-19 vaccination program had led to more economic activities.
But the Philippines cannot entirely avoid the economic weaknesses of its Asian neighbors. Commodities, exports and imports are dictated by market forces that influence global trading. The Philippines should be ready for any market eventuality.
