Updated: Jul 25, 2022 10:39 PM STI
New York [US]July 25 (ANI): Some Asian economies face the risk of recession as rising prices prompted central banks to raise interest rates, according to a Bloomberg survey released this month.
The economic survey predicted Sri Lanka’s slowdown in the next financial year. It says crisis-ridden Sri Lanka has an 85% chance of falling into recession in 2023, up from 33% in the previous survey.
According to Bloomberg, the probability of recession for several other Asian economies remained unchanged in the survey. The economists who conducted this survey see a 20% chance that China will enter a recession and a 25% chance that South Korea or Japan will.
They also raised the probability of a recession in New Zealand, Taiwan, Australia and the Philippines to 33%, 20%, 20% and 8%, respectively. The report adds that the central banks of these countries have raised interest rates to control inflation.
While predicting a recession, the Bloomberg report says Asian economies have largely remained resilient relative to Europe and the United States.
Steven Cochrane, chief economist for Asia-Pacific at Moody’s Analytics Inc, said soaring energy prices have hit countries like Germany and France the hardest, with a ripple effect on the rest of this region.
He said the risk of a recession in Asia is around 20-25%, while the chances of the United States entering one are around 40%. Meanwhile, Europe’s risk is between 50 and 55%.
Last week, the Asian Development Bank (ADB) lowered its economic growth forecast for developing Asia and the Pacific to 4.6% this year due to a slowdown in China’s expansion, more aggressive monetary tightening in advanced economies; and fallout from the continued Russian invasion of Ukraine.
The outlook compares to a projection of 5.2% released by the AfDB in April. The bank also raised its inflation forecast for the region, amid rising food and fuel prices.
According to the AfDB, developing countries in Asia and the Pacific continue their recovery from the COVID-19 pandemic, according to the AfDB’s Asia Development Outlook (ADO) 2022 Supplement. Many countries are easing restrictions on mobility, which is boosting economic activity. However, growth has slowed in China, the region’s largest economy, due to disruption from new COVID-19-related lockdowns, as well as weaker global demand.
“The economic impact of the pandemic has diminished across most of Asia, but we are far from a full and sustainable recovery,” said AfDB Chief Economist Albert Park. “In addition to the slowdown in China, the fallout from the war in Ukraine has added to inflationary pressure that is pushing central banks around the world to raise interest rates, acting as a drag on growth. in the face of all these global uncertainties, which continue to pose risks for the recovery of the region.”
According to the AfDB, inflation in developing countries in Asia and the Pacific is expected to accelerate to 4.2% this year, against a previous forecast of 3.7%. However, inflationary pressure in the region as a whole is still weaker than elsewhere in the world. (ANI)