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Hong Kong (CNN Business) --
The World Bank said Tuesday that Asian countries may have to deal with three major economic shocks this year: the war in Ukraine, a sharp slowdown in China and Federal Reserve rate hikes. from the United States.
The development bank cut its 2022 growth forecast for the East Asia and Pacific region from 5.4% to 5%, warning that growth could fall to 4% if conditions weaken further, trapping 6 millions more people in poverty.
It also lowered China's growth forecast, estimating that the world's second-largest economy will now grow just 5% this year, down sharply from 8.1% last year.
This figure is also lower than China's official target of around 5.5%.
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"Just as the PEA region was weathering the recurring Covid-19 storms, three dark clouds have gathered on the economic horizon, which will mean lower economic growth and increased poverty," the World Bank said in its latest update. about the region.
Rising interest rates in the US may trigger capital outflows from developing economies and put pressure on their currencies, thereby inducing "premature" financial tightening and hurting growth, according to the World Bank.
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Meanwhile, a resurgence of Covid in China, its zero-tolerance approach to controlling the spread of the virus and problems in the country's huge real estate sector could dampen regional exports.
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"Specific shocks to economic activity in China are also likely to affect PES countries whose trade is increasingly oriented to China markets," the bank said.
China is experiencing its worst spike in Covid-19 cases since the original outbreak in Wuhan in 2020, prompting strict lockdowns in major cities.
Authorities in Shanghai, home to the country's financial hub and the world's largest container port, last week imposed a phased lockdown on its 25 million residents.
The restrictions have led to the closure of shops and restaurants, the closure of factories and the congestion of ports with ships.
Disruptions stemming from the war in Ukraine could affect the region "more specifically" by disrupting the supply of basic goods and increasing financial stress, the organization added.
"War and sanctions are likely to push up international food and fuel prices, hurting consumers and hurting growth," he said, adding that the number of poor in the Philippines, for example, could rise by 1.1 million if grain prices rise by 10% throughout the year.
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