ADB Chief Economist about impact of conflict in Ukraine on Asia’s economies

Albert Park, Chief Economist of the Asian Development Bank (ADB), published an analysis of the impact of the military conflict in Ukraine on the economies of Asian countries on his Twitter account.

«An increasing number of journalists have asked us for analysis on the impact of the Russia-Ukraine war on Asia’s economies. This is how my economics team and I see it at this moment in time, with recognition that the situation is moving fast and our analysis may change,» he stressed.

The impact of the Russia-Ukraine war on Asia’s overall trade is expected to be limited, as Russia and Ukraine account for only 2.5 percent of Asia’s imports and 1.5 percent of Asia’s exports. Developing Asia also accounts for only 5 percent of FDI in Russia.

However, as Albert Park said, countries in Central Asia and the Caucasus as well as Mongolia have close trade links with Russia and Ukraine, and so could be hit hard.

Even more critical in the Russia-Ukraine war— balance of payments of some countries in Central Asia/Caucasus greatly depend on remittances from Russia, which will decline sharply due to lost employment of migrants, ruble depreciation, and lack of bank access to SWIFT.

The biggest impact of Russia-Ukraine war on Asian economies will be higher oil and gas prices, which will fuel inflation and slow growth in energy-importing countries, but help net exporters.

As Albert Park noted, the Russia-Ukraine war will increase food prices. Russia and Ukraine supply 22 percent and 18 percent of global wheat and barley exports. Ukraine supplies 15 percent and 12 percent of global rapeseed and corn exports, and Russia supplies 12 percent of global fertilizer exports.