The development bank cut its 2022 growth forecast for East Asia and the Pacific (EAP) region to 5% from 5.4%, and warned that growth could slump to 4% if conditions weaken further, trapping 6 million more people in poverty.
Higher US rates are likely to trigger capital outflows from developing economies and put pressure on their currencies, thus inducing “premature” financial tightening and hurting growth, the World Bank said.
“Specific shocks to economic activity in China, are likely also to affect EAP countries whose trade is increasingly oriented to China’s markets,” the bank said.
Shocks emanating from the war in Ukraine could affect the region “most concretely” by disrupting the supply of commodities and increasing financial stress, the organization added.
“The war and sanctions are likely to increase international prices of food and fuel, hurting consumers and growth,” it said, adding that the number of poor in the Philippines, for example, could increase by 1.1 million if cereal prices rise 10% over the year.