The Russia-Ukraine conflict could differ across Asia-Pacific, but it is likely to lead to higher energy prices and headline inflation, and lower growth, S&P Global Ratings said in a note.
It said that the rising cost of energy and food will drive up prices generally in Asia-Pacific. “The hit on producer prices should come faster and harder than for consumer prices, especially compared with “core” consumer prices (excluding energy and food). This will likely squeeze the margins of downstream firms,” it said
It said that the higher consumer price index (CPI) inflation would strain monetary policy in India, Korea, the Philippines, Singapore, and New Zealand, where CPI inflation is preoccupying central banks
The rating agency said that such price and financial market squeezes would reduce growth across the region, with further hits coming from dampened consumer and business confidence.
“External demand would also weaken. We expect this will be most apparent in demand from Eastern Europe, the Middle East, and Africa, where the economic effects of the Russia-Ukraine conflict are likely to be the largest,” it said
