The growth outlook is underpinned by the region’s highvaccination rates, which should help mitigate the health risks of COVID-19, the report said.
Economists said that within ASEAN+3, financial risks arestill elevated in many economies due to the pandemic. Macro-financial policiescontinue to focuse on alleviating the pandemic’s impact on households andfirms and supporting an economic recovery. If the recovery is delayed, morebusinesses and individuals could come under financial stress.
According to the report, the war in Ukraine is an emergingrisk to the outlook. Its effects are already being felt in the region throughhigher energy prices. While ASEAN+3 economies have limited direct exposure toRussia and Ukraine, they will not remain unscathed if the war drags on. Theeconomic fallout - disrupted global supply chains, higher global inflation, andlower global growth - would undoubtedly hurt ASEAN+3 exports and growth.
In addition, soaring inflation in the United States hasprompted the US Federal Reserve to begin tightening monetary policy, butuncertainty remains as to how aggressive its approach will be.
Given the less supportive global policy settings in 2022,the region’s policymakers will have to undertake a crucial balancing act, avoidinga premature withdrawal of policy support to sustain the recovery, while at thesame time facilitating the reallocation of capital and labour to new andexpanding sectors and restoring policy space to prepare for future risks, saidAMRO Chief Economist, Dr. Hoe Ee Khor./.