Threats to east Asia outlook
Source: Agencies |
July 29, 2011, Friday
|
Print Edition
Print Edition
SURGING inflation, a weak post-tsunami economic recovery in Japan and debt woes in the United States and Europe threaten east Asia's economic outlook, the Asian Development Bank said yesterday.
The Manila-based lender maintained its growth forecasts for 14 emerging and newly industrializing east Asian economies in 2011 and 2012. But it said the region faces risks that also include more volatile financial markets and destabilizing inflows of short-term capital, or "hot money."
The ADB's growth forecasts were unchanged from a report in April, with east Asia forecast to expand nearly 8 percent this year and next. It forecasts China's gross domestic product growth at 9.6 percent this year and 9.2 percent next year.
But it indicated that economic growth forecasts for China, Malaysia, Thailand and Vietnam would likely could be cut. That would also result in a downgrade for the region.
In the first half of 2011, economic growth across east Asia eased from a blistering pace as inflation surged across much of the region, driven by higher commodity prices and strong economic recovery.
"Rapidly rising inflation risks a wage-price spiral that could derail the region's recent strong growth," the report said, noting that inflation in many economies has risen above 10-year averages.
The ADB warned in April that surging food prices of 10 percent on average in many Asian economies could drive 64 million more people into poverty.
The ADB also fretted about the dismal prospects for the US and Europe, which are plagued by high unemployment and debt problems. Both are major customers for East Asia's exports.
Iwan J. Azis, head of the lender's Office of Regional Economic Integration, warned that the region could also be hurt if the US government's top-notch credit rating is downgraded amid fears that US lawmakers may fail to come up with a way to prevent a debt default in the world's biggest economy.
The Manila-based lender maintained its growth forecasts for 14 emerging and newly industrializing east Asian economies in 2011 and 2012. But it said the region faces risks that also include more volatile financial markets and destabilizing inflows of short-term capital, or "hot money."
The ADB's growth forecasts were unchanged from a report in April, with east Asia forecast to expand nearly 8 percent this year and next. It forecasts China's gross domestic product growth at 9.6 percent this year and 9.2 percent next year.
But it indicated that economic growth forecasts for China, Malaysia, Thailand and Vietnam would likely could be cut. That would also result in a downgrade for the region.
In the first half of 2011, economic growth across east Asia eased from a blistering pace as inflation surged across much of the region, driven by higher commodity prices and strong economic recovery.
"Rapidly rising inflation risks a wage-price spiral that could derail the region's recent strong growth," the report said, noting that inflation in many economies has risen above 10-year averages.
The ADB warned in April that surging food prices of 10 percent on average in many Asian economies could drive 64 million more people into poverty.
The ADB also fretted about the dismal prospects for the US and Europe, which are plagued by high unemployment and debt problems. Both are major customers for East Asia's exports.
Iwan J. Azis, head of the lender's Office of Regional Economic Integration, warned that the region could also be hurt if the US government's top-notch credit rating is downgraded amid fears that US lawmakers may fail to come up with a way to prevent a debt default in the world's biggest economy.
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