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Yellen says Russia should be expelled from G20, US may boycott some meetings

US Treasury Secretary Janet Yellen. — US FEDERAL RESERVE

US Treasury Secretary Janet Yellen said on Wednesday that Russia should be expelled from the Group of 20 (G20) major economies forum, and the United States will boycott “a number of G20 meetings” if Russian officials show up. 

Her comments at a US House Financial Services Committee hearing raised questions about the G20’s future role in the wake of Russia’s invasion of Ukraine. 

Since 2008, the club has served as a key international forum for issues from coronavirus disease 2019 (COVID-19) relief to cross-border debt and also includes China, India, Saudi Arabia, and other countries that have been reluctant to condemn Russia’s actions. 

Ms. Yellen told lawmakers Russia’s invasion of Ukraine and the killings of civilians in Bucha “are reprehensible, represent an unacceptable affront to the rules-based global order, and will have enormous economic repercussions in Ukraine and beyond.” 

The United States and its key allies have placed greater emphasis in recent months on the G7 grouping of industrial democracies, whose interests are more aligned, using G7 meetings to coordinate their response to Russia’s war in Ukraine. 

Ms. Yellen said the Biden administration wants to push Russia out of active participation in major international institutions, but acknowledged it was unlikely that Russia could be expelled from the International Monetary Fund (IMF) given its rules. 

“President Biden’s made it clear, and I certainly agree with him, that it cannot be business as usual for Russia in any of the financial institutions,” Ms. Yellen said. “He’s asked that Russia be removed from the G20, and I’ve made clear to my colleagues in Indonesia that we will not be participating in a number of meetings if the Russians are there,” Ms. Yellen said. 

Indonesia holds the presidency this year and will host a finance meeting in July and a leaders summit in November. 

A Treasury spokesperson later said that Ms. Yellen was referring to an April 20 G20 finance ministers and central bank governors meeting on the sidelines of the IMF and World Bank Spring Meetings in Washington and associated deputies meetings. 

The April finance meeting will be held both in-person and virtually and Russia’s participation is unclear at present. 

Russia has said that President Vladimir Putin intends to attend the G20 summit in Bali this year and has received China’s backing to stay in the group. 

Indonesia could not expel or “disinvite” any G20 members, including Russia, a government official familiar with the matter said, adding whether a country attended was up to that nation. 

ENERGY FLEXIBILITY
Ms. Yellen’s testimony came as the Biden administration announced a new round of sanctions to punish Russia, including banning Americans from investing in Russia and locking Sberbank, Russia’s largest lender and holder of a third of its bank deposits, out of the US financial system, along with other institutions. 

But transactions allowing European allies to purchase Russian oil and natural gas were exempted through special Treasury licenses. 

Ms. Yellen said that flexibility on Russian energy transactions was needed because many European countries “remain heavily dependent on Russian natural gas, as well as oil, and they are committed to making the transition away from that dependence as rapidly as possible.” 

But she acknowledged that this would take time. 

A complete ban on oil exports from Russia, the world’s third-largest producer after the United States and Saudi Arabia, would likely prompt “skyrocketing” prices that would hurt both the United States and Europe, Ms. Yellen said. 

She added that she hoped that currently high prices would entice oil companies in the United States and elsewhere to ramp up production in the next six months, which, along with Mr. Biden’s release of oil from the US Strategic Petroleum Reserve, may allow for tougher restrictions on Russian oil. 

CHINA WARNING
Ms. Yellen also issued a warning to China that Treasury was prepared to turn its sanctions tools against Beijing in the event of Chinese aggression against Taiwan, which China claims as a wayward province. 

Asked if the United States would take such steps if Taiwan was threatened, she said: “Absolutely. I believe we’ve shown that we can. In the case of Russia, we threatened significant consequences. We’ve imposed significant consequences. And I think that you should not doubt our ability and resolve to do the same in other situations.” — David Lawder and Dan Burns/Reuters

Meta plans virtual currency, creator coins for its apps — FT

Screenshot via Meta/YouTube

Meta Platforms Inc. is readying plans to introduce virtual tokens and cryptocurrencies to its family of apps with an aim to use such virtual tokens for rewarding creators and lending and other financial services, the Financial Times (FT) reported on Wednesday. 

The move, which is reported to be in its early stages, comes as Meta grows its focus on services centered around the metaverse, a virtual environment where people interact, work and play. 

If implemented, it could also give Meta a new revenue channel and control over transactions in its suite of apps and services, which include Facebook, Instagram, WhatsApp, and the Meta Quest virtual reality platform. 

Meta’s cryptocurrencies, internally dubbed “Zuck Bucks”, are intended for the metaverse and may not be based on blockchain, the FT report said, citing people familiar with the matter. 

Meta could introduce in-app tokens that would be centrally controlled by the company, the report said, and such tokens could be used to pay favorite creators on Instagram or reward people who make meaningful contributions in Facebook groups. 

“We have no updates to share today,” a Meta spokesperson told Reuters on Wednesday, adding that the company is focused on building for the metaverse “and that includes what payments and financial services might look like.” 

Mark Zuckerberg, chief executive officer of Meta, said last month that Instagram will introduce non-fungible tokens (NFTs) in the “near-term.” 

Earlier this year, Meta joined the Crypto Open Patent Alliance (COPA), a group of companies led by Jack Dorsey’s Block Inc that has pledged to promote open access to cryptocurrency technologies. — Reuters

Britain plans nuclear power, offshore wind to boost energy independence

A 3D model of Hinkley Point C nuclear power station in Somerset, England. — GOV.UK

LONDON — Britain will set out a plan to expand nuclear and offshore wind power on Thursday in a drive to bolster its energy independence at a time of surging prices and Russia’s invasion of Ukraine. 

It will increase wind, nuclear and solar generation, while supporting production of domestic oil and gas in the near term, the government said, adding that 95% of electricity by 2030 could be low-carbon. 

Nuclear is central to the plan, with an ambition to increase capacity to 24GW by 2050. That would meet around a quarter of projected electricity demand, up sharply from about 14% today. 

Prime Minister Boris Johnson said the plan would scale up “affordable, clean and secure energy made in Britain, for Britain.” 

He said it would “reduce our dependence on power sources exposed to volatile international prices we cannot control, so we can enjoy greater energy self-sufficiency with cheaper bills.” 

The targets include up to 50GW of offshore wind by 2030. Up to 5GW would come from floating installations in deeper seas. There would also be a new licensing round for North Sea oil and gas, and a consultation on rules for solar projects. 

Mr. Johnson had promised the strategy almost a month ago but it has been delayed by disputes over funding and opposition by some lawmakers to onshore wind farms. 

The plan will have no immediate impact on supply or prices that have helped push UK inflation to a 30-year high, but increased nuclear, solar, wind and hydrogen will help the long-term shift from fossil fuels. 

Energy prices surged last year as the global economy reopened after the pandemic. Russia’s invasion of Ukraine sent them higher again. 

Unlike Germany, Britain is not dependent on Russian energy, with the country supplying 8% of oil demand and less than 4% of natural gas — but it will be hit by competition as Europe seeks alternative sources. 

London said on Wednesday it would ban imports of Russian oil and coal by the end of the year, and would phase out Russian gas as soon as possible. 

Surging prices caused British consumer bills to rise 54% in April, and industries such as producers of glass, steel and chemicals say they cannot compete when prices are so high. 

Gas-fired plants generated 40% of Britain’s electricity in 2021, with wind providing 20%, nuclear 14%, imports 9% and others such as bioenergy, solar and coal the rest. 

The government said it would push forward new nuclear projects as soon as possible, including at the Wylfa site in Anglesey, Wales. 

A new body — Great British Nuclear — will be set up, it said, and up to eight new reactors could be delivered, equivalent to one a year instead of one a decade. 

All but one of Britain’s existing nuclear plants are scheduled to close by 2030 and the first new plant in more than 20 years, Hinkley Point C, is expected to come online in 2026, almost a decade later than originally promised. — Kate Holton and Susanna Twidale/Reuters

US FBI says it disrupted Russian hackers

PIXABAY

WASHINGTON — The US Federal Bureau of Investigation (FBI) has wrested control of thousands of routers and firewall appliances away from Russian military hackers by hijacking the same infrastructure Moscow’s spies were using to communicate with the devices, US officials said on Wednesday. 

An unsealed redacted affidavit described the unusual operation as a pre-emptive move to stop Russian hackers from mobilizing the compromised devices into a “botnet” — a network of hacked computers that can bombard other servers with rogue traffic. 

“Fortunately, we were able to disrupt this botnet before it could be used,” US Attorney General Merrick Garland said. 

The Russian Embassy in Washington did not immediately return an email seeking comment. 

The targeted botnet was controlled through malware called Cyclops Blink, which US and UK cyberdefense agencies had publicly attributed in late February to “Sandworm,” allegedly one of the Russian military intelligence service’s hacking teams that has repeatedly been accused of carrying out cyberattacks. 

Cyclops Blink was designed to hijack devices made by WatchGuard Technologies Inc. and ASUSTeK Computer Inc., according to research by private cybersecurity firms. It provides Russian services with access to those compromised systems, offering the ability to remotely exfiltrate or delete data or turn the devices against a third party. 

Watchguard issued a statement confirming it worked with the US Justice Department to disrupt the botnet but did not disclose the number of devices affected — saying only that they represented “less than 1 percent of WatchGuard appliances.” 

AsusTek, better known as Asus, did not immediately return messages seeking comment. 

FBI Director Chris Wray told reporters the FBI, with court approval, secretly reached into thousands of routers and firewall appliances to delete the malware and reconfigure the devices. 

“We removed malware from devices used by thousands of mostly small businesses for network security all over the world,” Mr. Wray said. “We shut the door the Russians had used to get into them.” 

The affidavit noted that US officials launched an awareness campaign “to inform owners of WatchGuard devices of the steps they should take to remediate infections or vulnerabilities” and yet less than half the devices had been fixed to expel the hackers. 

The affidavit noted that the FBI had carried out its work in cooperation with WatchGuard. 

The announcement came amid a flurry of new sanctions announced against Russian banks and elites, days after grim images emerged of the bodies of civilians shot at close range in the town of Bucha. 

Russia says its “special military operation” is aimed at demilitarizing and “denazifying” Ukraine, and it has denied targeting civilians. — Sarah N. Lynch/Reuters

S. Korea’s president-elect wants US nuclear bombers, submarines to return

US Navy illustration

SEOUL — Advisers to South Korea’s president-elect sought redeployment of US strategic assets, such as nuclear bombers and submarines, to the Korean peninsula during talks held on a visit to Washington, one of the advisers said on Wednesday. 

The team of foreign policy and security aides to incoming president Yoon Suk-yeol met US national security adviser Jake Sullivan as Yoon seeks a more constant security presence to deter threats from North Korea as it steps up weapons tests. 

“Deploying the strategic assets is an important element of reinforcing the extended deterrence, and the issue naturally came up during the discussions,” Park Jin, a four-term lawmaker who led the delegation, told reporters. 

He added that both sides explored ways to bolster US extended nuclear deterrence at the talks on coordinating efforts against the North Korean threat held on a trip that also aimed to secure an early summit with President Joseph R. Biden, Jr. 

A White House official asked about such talks, and whether Washington supported the deployments to South Korea, responded that both sides had “discussed generally” the US defense commitments, but did not elaborate. 

Mr. Yoon, set to be sworn in on May 10, is mapping out his foreign policy agenda after winning the March 9 election, just as tension flares after neighboring North Korea launched a new intercontinental ballistic missile (ICBM) last month. 

The deployment of US bombers, aircraft carriers and nuclear submarines is part of Mr. Yoon’s election plank promising to “respond firmly” to the North’s threats. 

JOINT DRILLS 

Mr. Yoon has also vowed to “normalize” joint military drills with the United States that were scaled back under outgoing liberal President Moon Jae-in, in a bid to placate Pyongyang and resume stalled talks to rid the peninsula of nuclear weapons. 

North Korea has long denounced the exercises as a rehearsal for war, and the allies have reduced field training and shunned use of major weapons such as bombers and air carriers, focusing instead on computer simulations. 

But Mr. Park did not elaborate when asked about plans for regular spring exercises, which domestic media have said could include nuclear bombers for the first time in nearly five years. 

“We agreed that what’s most important is to maintain deterrence so that we can strongly respond to any possible North Korean provocations,” he said, whether ICBM launches or psychological warfare in the form of verbal attacks. 

The delegation invited Biden to visit Seoul when he travels to Asia to meet the Quad grouping of nations, which also includes Japan, Australia and India, Park added. 

He also delivered a letter to Mr. Biden from Mr. Yoon highlighting his “solid willingness and vision” to advance ties not only on North Korea but also economic security and other issues, he said. 

Mr. Park’s name is being floated as a strong candidate to be foreign minister, along with that of Cho Tae-yong, a lawmaker of Mr. Yoon’s conservative People Power Party (PPP) who was also in the delegation. — Hyonhee Shin/Reuters

SM turns to rainwater harvesting: a key to living flood-free

• Rainfall is often seen as a foe by Filipinos who face about 20 typhoons a year causing disruption and mass evacuations, but it can also be a friend as rainwater can be a solution to help address water scarcity.

• SM turns rainwater from a foe to a friend by building rainwater catchments in its malls to harvest large volumes of rainwater particularly in flood-prone areas, helping keep neighboring communities to be safe and flood-free.

• 20 SM malls can catch and store a total of 79,257 cubic meters of rainwater, equivalent to almost 32 Olympic-size swimming pools.

Climate change is real and Filipinos are among those who can attest to the devastating effects it brings to everyday life. Faced with about 20 typhoons a year, the Asian Development Bank reported that the total impact from storms have reached about US$20 billion from 1990 to 2020. It causes a temporary disruption due to mass evacuations which bring about an average of 2%-8% reduction in gross domestic product annually.

Despite the reoccurring devastation felt during calamities, Filipinos still manage to see the humorous side of life and are often reported as one of the happiest people in the world. However, this may soon be tested as, according to the latest report of the UN Intergovernmental Panel on Climate Change, things are about to get worse as the planet heats up, accelerating the effects of climate change and making the Philippines more vulnerable to drastic changes in weather patterns.

On average, the Philippines receives about 2,400 millimeters of rainfall each year, one of the highest in the world. While this poses a problem for the country, there is a silver lining, as it can also be the solution for water scarcity. However, currently the Philippines only harvests around 6% of its rainwater compared to India, which harvests around 60% of the 700-millimeter average rainfall it receives each year.

Rainwater — a friend or a foe?

Water is a scarce resource. The United Nations Sustainable Development Goal number 6 identifies access to clean water as one of the global priorities to be achieved by 2030. Aligned to its environmental responsibility programs, SM takes a closer look at the use of water and how it can be turned from a foe to a friend.

SM builds its malls and integrated lifestyle cities with resilience and sustainability in mind. Understanding the value of water, SM builds rainwater catchments in its malls to harvest large volumes of rainwater particularly in flood-prone areas.

“We approach it two ways: resilience — to help communities be flood-free; and sustainability — to optimize water which is a scarce resource so we can use it for other purposes rather than just waste it,” says Architect Fides Garcia-Hsu, vice-president at SM Engineering Design and Development.

Vermont Park and Vermont Royale are two communities that once saw rain as a foe. Every time it rained, their neighborhoods ended up under water, damaging their homes. Today, homeowners welcome the rain as water that can be harvested and stored for future use. The reason? SM City Masinag’s rainwater catchment facility! It has a 17,681 cubic meter water capacity. The two communities connected their drainage systems to the mall which is equipped with three 30HP submersible pumps which are used to pump out accumulated rainwater.

“Wherever SM is, we try to help our communities become resilient to changing weather patterns,” explains Arch. Garcia-Hsu. “Nationwide, we have 20 malls equipped with rainwater catchment facilities that help rainwater management to avoid flash floods for surrounding communities.”

As a company, SM invests 10% of its capital expenditure to integrate disaster-resilient and sustainability features in its malls and integrated lifestyle city designs. “We take a long-term view on resilience and when we talk about sustainability, we look at how we can address perennial problems like flooding and address systemic change,” Arch. Garcia-Hsu expounds.

Serving as pioneers in the installation of rainwater catchment facilities, SM was instrumental in the passing ordinances and inclusion of the installation of water catchment facilities for developments by regulatory bodies. In recent years, Senator Manny Pacquiao passed the ‘Rain Water Harvesting Act – Senate Bill 1309’ mandating the establishment, maintenance and management of rainwater harvesting systems in the country.

“Aside from building resilient infrastructure, we also build the resilience of our stakeholders by providing disaster preparedness training through our SM Cares programs,” shared Chito Bauzon, SM Cares Marketing assistant vice-president. “We have programs targeted to senior citizens and those with special needs as they are the ones left most vulnerable during times of calamities.”

With the threat of climate change looming, typhoons are only expected to get stronger with intensified rainfall. With more Filipinos moving to urban centers, the Philippines will need to retrofit its cities for resiliency or build new sustainability cities to finally live flood-free.

 

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Jobless rate steadied at 6.4% in Feb.

The country’s unemployment rate steadied on a monthly basis in February but remained the lowest level in since the coronavirus pandemic started tempered by the expanding Filipino workforce, the Philippine Statistics Authority reported this morning.

Preliminary results of the agency’s February 2022 round of the Labor Force Survey (LFS) showed around 3.126 million unemployed Filipinos, higher than January’s 2.925 million but lower from February of last year’s 4.187 million.

This put the February unemployment rate at 6.4%, unchanged from the previous month’s jobless rate but smaller than February last year’s 8.8%.

This was the lowest share of the unemployed to the total Filipino labor force in over two years or since the 5.3% in January 2020

The underemployment rate — the proportion of those already working but still looking for more work or longer working hours — improved to 14% in February from the 14.9% in January and remained smaller than the 18.2% in the same month last year.

This translated to 6.382 million underemployed Filipinos, or 14,654 less than the 6.397 million in January.

The February underemployment rate was the lowest in nine months or since the 12.3% in May last year.

The size of the labor force was estimated at 48.606 million in February, 2.66 million more from January’s 45.943 million. Likewise, this was also larger than the 47.341 million in February last year. This brought the labor force participation rate (LFPR) to 63.8% in February.

The employment rate — the proportion of the employed to the total labor force — was recorded at 93.6% in February. This was the same as the 93.6% rate in January this year but higher than the 91.2% in February last year.

In absolute terms, this was equivalent to 45.480 million employed persons in February versus the 43.018 million and 43.153 million in January and February last year, respectively.

A Filipino worker worked for an average of 40.8 hours a week in February, lower than 41.8 hours in January but marginally higher than 38.9 hours a year ago.

Services remained the largest employer in February, accounting for 58.2%. This was lower than 58.9% share the previous month. It was followed by agriculture (23.9% from 21.7%) and industry (17.9% from 19.3%).

The February round of LFS was conducted from Feb. 8 to 28. — Ana Olivia A. Tirona

Security Bank Corp.’s meeting of stockholders set on April 26 via remote communication

 

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Republic Glass Holdings Corp. announces schedule of annual stockholders’ meeting through remote communication on April 29

 

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Banks’ NPL ratio hits 3-month high

By Luz Wendy T. Noble, Reporter

PHILIPPINE BANKS saw an uptick in bad loans in February, reflecting the challenges that many borrowers still face in repaying their debt despite the gradual reopening of the economy.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed the gross nonperforming loan (NPL) ratio of the Philippine banking industry increased to 4.24% in February from 4.14% in January. 

The NPL ratio also picked up from the 4.08% a year earlier and is the highest since the 4.35% seen in November.

Bad loans in February increased by 2.38% to P472.664 billion from P461.66 billion in January. This was also 9.6% higher than the P431.266 billion worth of bad loans a year earlier.

In February, banks’ gross loan portfolio rose by 5.4% to P11.15 trillion from P10.579 trillion in the same month a year ago. It inched up by 0.07% from the P11.142 trillion in January.

“The recent pickup in NPL ratio underscores the challenges faced by the economy despite the progressive reopening of the economy,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail. 

Metro Manila and some provinces were placed under Alert Level 3 in January due to the Omicron-driven surge in coronavirus disease 2019 (COVID-19) infections. Restrictions have since been relaxed to the most lenient Alert Level 1 as the number of COVID-19 cases dropped.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in a Viber message said corporate borrowers as well as consumers are likely already feeling the pinch as borrowing costs rose in recent months.

“[This] further impaired the ability to pay of some borrowers,” he said.

Past due loans held by lenders rose by 1.17% to P557.964 billion from P551.472 billion in the same month last year. These made up 5% of borrowings, down from 5.21% a year earlier.

Meanwhile, restructured loans amounted to P344.081 billion, climbing by 71.2% year on year from P200.986 billion. This brought its ratio higher to 3.09% from 1.9%.

As bad loans piled up, banks’ allowance for credit losses expanded by 8.9% to P407.035 billion from P373.631 billion a year earlier. This is equivalent to 3.65% of the total loan portfolio, up from 3.53%.

The industry’s NPL coverage ratio stood at 86.12%, down from 86.64% in February 2021.

In the coming months, asset quality will likely be affected by borrowing costs and faster inflation, Mr. Mapa said.

“We can expect NPL ratios to remain at current levels as borrowing faces headwinds of faster inflation and rising borrowing costs, two developments that could slow overall economic activity and constrain cash flow in the near term,” he said.

Inflation in March quickened to a six-month high of 4%, already matching the upper end of the central bank’s 2-4% target. This was mainly driven by the surge in pump prices.

For his part, Mr. Ricafort said continued economic reopening and the improvement in the employment market could help to improve banks’ asset quality.

Fitch Ratings on Tuesday said higher business costs and rising inflation caused by the war in Ukraine could affect growth opportunities for businesses and consumers, but is unlikely to drive a sharp increase in loan delinquencies.

Economy to grow by 6% despite risks from Ukraine war, ADB says

REUTERS
A silhouette of the skyline is pictured at sunset in Quezon City, Metro Manila, Philippines, Nov. 27, 2020. — REUTERS

THE ASIAN Development Bank (ADB) maintained its Philippine growth forecast for 2022, as domestic investment and consumption continue to improve amid looser lockdown restrictions, but it warned of risks from the Russia-Ukraine war.

In the Asian Development Outlook 2022, the multilateral lender said the country’s gross domestic product (GDP) is projected to grow by 6% this year, unchanged from the forecast given in December. It expects GDP to expand by 6.3% in 2023.

However, these projections are below the economic managers’ 7-9% target for 2022, and 6-7% goal for 2023. In 2021, the Philippine economy grew by 5.6%.

ADB keeps 2022 Philippine GDP growth forecast at 6%, expects 6.3% in 2023

“Nearly all indicators point to higher growth for the Philippines this year and in 2023, barring the impact of external factors from geopolitical tensions that may dampen growth globally, including in the country’s key export markets Europe and the United States,” ADB Philippines Country Director Kelly Bird said in a statement.

The government has moved to reopen the economy by loosening mobility curbs, ramping up coronavirus disease 2019 (COVID-19) vaccination, and easing international travel restrictions. Consumer and business confidence is growing as COVID-19 infections continue to decline.

At the Asian Impact Webinar on Wednesday, ADB Macroeconomic Research Division Director Abdul Abiad noted that there’s more economic activity as the government relaxed restrictions, which allowed domestic investment and consumption to rebound.

Mr. Abiad said the Philippine GDP outlook was unchanged due to the country’s relatively small trade and financial links to Russia and Ukraine.

“In terms of direct channels of impact, it’s not a lot. It will work primarily through inflation,” he said.

The ongoing Russia-Ukraine war is the biggest risk to the growth outlook, the ADB said, adding that “inflation could surge higher with second-round impacts, such as tightening credit markets and higher interest rates.”

The ADB expects inflation to quicken to 4.2% this year due to soaring global oil and commodity prices. Inflation is projected to decelerate to 3.5% in 2023.

ADB Southeast Asia Senior Regional Cooperation Officer Dulce Zara said inflation may further accelerate this year, depending on the extent of the impact of the ongoing geopolitical conflict.

“It will affect inflation in the country simply because of the rising cost of oil. We were looking at $70 per barrel in 2021, but now it’s above $100 per barrel, and that has a huge impact on the budget of the government…. The impact is affecting the most vulnerable groups, so the government has to put into place targeted fiscal response for those vulnerable groups,” she said.

The multilateral bank said the current account deficit is expected to widen to 3.2% of GDP this year, and narrow to 3.1% in 2023, as quicker economic growth boosts imports.

“Higher oil prices this year will also drive up import costs. Growth in merchandise exports will be moderate compared with imports. Rising remittances and services exports, including business processing outsourcing and tourism receipts, will help trim the current account deficit,” the ADB said.

SLOWER GROWTH IN ASIA
Meanwhile, growth in developing Asia will likely be slower this year than previously thought, the ADB said, as the war in Ukraine is expected to derail economic recovery in the region still reeling from the COVID-19 pandemic.

The bloc’s combined economy, which includes China and India, is projected to expand 5.2% this year, the ADB said, down slightly from the 5.3% forecast in December, and sharply lower than the previous year’s 6.9% growth.

For 2023, the region is forecast to grow by 5.3%.

“The Russian invasion of Ukraine has severely disrupted the outlook for developing Asia which is still contending with COVID-19,” the ADB said in its Asian Development Outlook report.

The Manila-based multilateral lender said other factors could also cloud the region’s growth outlook, including ongoing increases in commodity prices, heightened financial stability risks that may stem from aggressive interest rate hikes in the United States, and the emergence of deadlier COVID-19 variants.

China’s economy will probably grow by 5% this year, the agency said, slower than its December projection, and much weaker than its 8.1% expansion in 2021, as COVID-19 outbreaks disrupt economic activities and chill consumer spending.

Except for South Asia, all sub-regions were expected to post slower-than-expected growth this year. The ADB now sees East Asia and Southeast Asia growing by 4.7% and 4.9% respectively, instead of 5% and 5.1%.

With the sharper-than-expected increases in commodity prices, the ADB raised its inflation forecast for the region to 3.7% in 2022 from its earlier forecast of 2.7%, before easing to 3.1% in 2023. — Tobias Jared Tomas with Reuters

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