Explainer | War, inflation, fuel and food shortages: the Asia-Pacific’s biggest economic risks
- War upended economists’ recently positive outlook, with more concern over inflation, supply chain disruption and possible global recession
- Much of Asia-Pacific will see higher oil and commodity prices, shortages, slower demand for manufactured goods though there will be some trade winners
Just a month ago, economists were optimistic about the Asia-Pacific region, predicting that its economic recovery was poised to continue on an upwards trajectory this year.
The region took the Omicron outbreak in its stride, with most economies learning to live with Covid-19 and opening up their borders.
There were still lingering concerns over rising oil and other key commodity prices that were making everyday goods such as petrol and diesel expensive. But on the whole, sentiment was buoyant with economists even forecasting a comeback for Southeast Asia’s tourism industry, which has been battered by two years of pandemic restrictions.
Russia’s invasion of Ukraine upended this outlook.
Problems such as rising inflation, supply chain disruptions and concerns over a global recession magnified overnight. Oil prices shot to their highest in 12 years.
Still fragile from the pandemic onslaught, it is increasingly difficult for Asian economies to know what to expect.