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NEW DELHI: Asia’s economic outlook has started to worsen amid growing challenges arising from the Russia-Ukraine war, stronger than expected monetary tightening in advanced economies, and a sharp exchange rate depreciation, said Masatsugu Asakawa, president, Asian Development Bank, on Tuesday. Addressing a press conference during the ADB’s 55th annual meeting, Asakawa said the multilateral lender is working to support developing member countries through these challenging conditions.

At ADB’s first partial in-person meeting since 2019, the multilateral agency discussed Asia’s path to recovery and the new uncertainties and headwinds including food security, inflation, and debt crises.

“Social and economic conditions have been challenging. The pandemic was difficult and continues to impact many aspects of life. In 2020, Developing Asia and Pacific saw its first contraction of economic growth in nearly six decades. We now see economies in recovery, but the outlook has started to worsen…" said Asakawa.

The ADB has revised down growth forecasts for 2022 for Developing Asia and Pacific to 4.3% from 5.2% estimated in April, and to 4.9% for 2023 from 5.3% projected earlier.

It also lowered its growth forecast for India to 7% for 2022-23 from 7.2% estimated in July, in view of higher-than-expected inflation and monetary tightening. It also cut GDP growth estimate for 2023-24 to 7.2% compared to 7.8% estimated in its supplementary outlook in July.

It said that elevated oil and commodity prices and high inflation will likely require the continued tightening of monetary policy to ensure that inflation expectations do not get entrenched, which would likely hinder economic growth in the short run.

India’s retail inflation has been hovering at a record 7%, having stayed above the Reserve Bank of India’s upper tolerance limit of 4-6% for eight straight months now, largely led by higher food prices and pressure from rising global oil and commodity prices.

“The supply chain issues from the pandemic and the Russian invasion of Ukraine have contributed to food prices that have soared to record highs this year. We also have to keep in mind that the current food security crisis will get even worse if we fail to address climate change," said Asakawa.

ADB has announced plans to provide at least $14 billion over 2022–2025 in a comprehensive programme of support to ease a worsening food crisis in Asia and the Pacific, and improve long-term food security by strengthening food systems against the impacts of climate change and biodiversity loss.

“This is a timely and urgently needed response to a crisis that is leaving too many poor families in Asia hungry and in deeper poverty," said Asakawa, “We need to act now, before the impacts of climate change worsen and further erode the region’s hard-won development gains. Our support will be targeted, integrated, and impactful to help vulnerable people, particularly vulnerable women, in the near-term, while bolstering food systems to reduce the impact of emerging and future food security risks," he added.

The Russian invasion of Ukraine has disrupted supplies of food staples and fertilizer, straining a global food system already weakened by climate change impacts, pandemic-related supply shocks, and unsustainable farming practices, ADB said in a release on Tuesday.

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