Asian growth to be hit by inflation

Source: Exec Digital UK

Date :22/07/2008 09:26:38

The Asian Development Bank (ADB) warns today, July 22, that economic growth in Asia will fall to 7.6 percent this year from nine percent in 2007.

ADB said that a global economic slowdown, sharp rise in food and energy prices and volatility reigns in financial markets will cause economic growth in Asia to drop.

The Manila-based organisation said core inflation, a measure of price increase that excludes food and energy costs, was expected to rise to 6.3 percent, more than double the average rate of the past 10 years.

“Rising inflation is a serious threat to the region's sustained, strong growth as high import costs of food and fuel threaten to trigger a price/wage spiral, unleashing more inflation,” ADB economist Jong-Wha Lee said in the bank's semi-annual report.

Economic growth in China is expected to slow to 9.9 percent in 2008 and 9.7 percent in 2009, from a growth rate of 11.9 percent in 2007.

The slowdown in China is seen as being due to a gradual appreciation of the Yuan, monetary tightening policies and weakening external demand.

Growth in the 10-member Association of Southeast Asian Nations (ASEAN) is forecast to ease by one percentage point to 5.5 percent in 2008.