Russia-Ukraine war will have adverse economic impact on South Asia.

ISLAMABAD: President SAARC Chamber of Commerce and Industry Iftikhar Ali Malik Monday cautioned that escalating Russia-Ukraine war will have adverse economic impact on South Asian countries.

Talking to a delegation of traders led by Momin Ali Malik, member executive committee Lahore Chamber, he said the 2022 outlook for the global economy now seems bleak and South Asia will also be affected.

The octogenarian trade leader said Russia and Ukraine combined have a significant share of global supplies of oil, gas and other commodities, so the invasion has increased commodity prices. The direct impact on South Asia will mainly occur through trade linkages, particularly through rising commodity prices as the region is a net importer of commodities.He said even before the invasion, inflation in South Asian economies was rising relative to competitors in global markets. The additional shock in commodity prices will further widen the gap -- increasing the relative cost of production in the region -- and erode the competitiveness of cheap labour and energy-intensive industries he added. He said reliance on fossil fuels for energy generation is higher in South Asia than elsewhere in Asia.

Iftikhar Ali Malik said the direct impact will immediately result into higher inflation while the indirect impact will face lower economic growth leading to stagflation and the extent of the economic hit on South Asia will depend on the duration of the conflict, the severity of Western sanctions on Russia and Russian response. He said South Asian countries will vary depending on their economic linkages with Russia and Ukraine, and the growth and financial market linkages to the rest of the world.

He is of the view that tough Western sanctions...