ADB sees Asia growth slowing, warns on inflation
April 2nd, 2008 | by admin |By Raju Gopalakrishnan
MANILA (Reuters) - Growth in Asia’s developing economies will slow in 2008 to the weakest in five years, but the region needs to tackle inflationary pressures before they spiral out of control, the Asian Development Bank said on Wednesday.
While growth would remain relatively robust in the face of the global credit crisis, inflation will rise to a decade-long high, presenting a major risk.
“If this genie gets out of the bottle and inflation becomes ingrained, it could bring the growth process to a grinding halt,” Ifzal Ali, the ADB’s chief economist, told Reuters in an interview in Hong Kong.
“Economically, socially and politically it will become very dangerous. In Asia we have been focusing a lot on growth and we have taken price stability for granted — this is a reality check.”
The region, which includes China, India, the “Tiger” economies of Southeast Asia, South Korea and Central Asia, should register average GDP growth of 7.6 percent in 2008, the ADB said in its annual economic outlook.
But it follows an 8.7 percent surge in 2007 and is the lowest annual growth figure since 7.1 percent in 2003.
The ADB itself has trimmed the 2008 growth forecast from the 8.2 percent it predicted in its last regional outlook six months ago.
“Developing Asia is not immune to global developments, but neither is it hostage to them,” the Manila-based multilateral agency said, referring to the credit crisis.
