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SINGAPORE: Soaring energy and food prices will help push the Asia
Pacific inflation rate to a forecast 3.6 percent this year from 2.7
percent last year, a regional think-tank said Friday.
At the same time, growth is tipped to slow to
3.7 percent from 4.9 percent in 2007, the Pacific Economic
Cooperation Council (PECC) said.
It said inflation is the biggest worry for the
region at a time of slowing growth in the United States, the
world’s largest economy and a major market for the region’s
export-reliant economies.
“While the slowdown in growth weighs heavily
on policymakers’ minds, it is the spectre of inflation that is
causing the biggest headaches,” PECC said in its latest outlook
for the region.
“Combined together, there is very little room
for monetary stimuli,” it said in the forecast for 16 Asia Pacific
economies including the United States, Japan and China.
Consumers are paying more for food and petrol
throughout the region.
The pain is particularly acute in Indonesia and
China, the report said. Inflation in Indonesia is projected at 11.7
percent this year, nearly twice that of 6.6 percent in 2007 while in
China, it is seen at 6.0 percent compared with 4.8 percent last
year, it said.
For Southeast Asia as a whole, overall inflation
in 2008 is projected at 6.2 percent, up from 3.2 percent last year,
said PECC.
“Even with appreciating cur-rencies, Asia
Pacific economies are starting to feel the pinch of higher energy
and commodity prices,” said Yuen Pau Woo, coordinator of the PECC
report.
“The recent spike in food prices has not
helped. Indeed, it has exacerbated the adverse impact on vulnerable
groups who spend a high proportion of their incomes on rice and
other staples,” he said.
The slowing US economy, which some economists
say is already in a recession, is the key reason behind the downward
growth revisions for the Asia Pacific region, said PECC.
Most of Asia is expected to feel the impact of
the US slowdown with China’s economic growth seen weakening to 9.6
percent this year from 11.4 percent last year. In Japan, 2008 growth
is projected at 1.6 percent from 2.1 percent in 2007, said PECC.
Real gross domestic product growth in the United
States is tipped to slow to 1.0 percent this year from 2.2 percent
but is expected to bounce back in 2009 with ex-pansion of 2.5
percent, it said.
“The revision to our forecast comes from
increased pessimism about the health of the US economy, which is
forecast to grow at only 1.0 percent this year,” PECC said.
“The knock-on effects of the slowdown in the
US economy and the turmoil in financial markets are seen in downward
revisions for growth in most Asia Pacific economies,” it said.
-- AFP
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