War in Ukraine takes toll on East Asian economies — Shantanu Mukherjee

JUNE 9 — In today’s hyper-connected world, with our interlinked economies, migrant diasporas and 24-hour news channels, it’s no surprise that the war in Ukraine is being felt across the globe. The war has upended the fragile economic recovery from the pandemic, not only triggering a devastating humanitarian crisis, but also increasing food and commodity prices and globally exacerbating inflationary pressures.

Why is this happening? Rising geopolitical and economic uncertainties are dampening business confidence and increasing borrowing costs are weakening investment prospects. Additionally, there are major downside risks from further escalation of the war in Ukraine, new waves of the pandemic and faster-than expected monetary tightening in developed economies.

Prolonged supply chain disruptions, and soaring commodity prices have contributed to higher manufacturing costs across the region, making it tougher for people in many countries to get the goods they need. As ever, it is the most vulnerable people in Asia and around the world who suffer greatest from slow growth, rising inflation, and the energy and food system disruptions stemming from the war in Ukraine. The decline in real incomes is particularly worrying in developing countries where poverty is more prevalent, wage growth remains constrained, and fiscal support measures to alleviate the impact of higher oil and food prices are more limited.

Finally, the war in Ukraine unfolds at a time when global CO2 emissions have reached a record high. The conflict will significantly impact the global fight — for better or worse- against the climate emergency by driving up energy prices and placing energy security at the heart of policymaking in many places.

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