(Reuters) - Growth in most of Asia will cool this year because of tighter credit conditions and a slowdown in advanced economies, although inflation may take longer to subside, the World Bank said in a report on the global economy on Wednesday.
After a torrid 2010, some moderation was welcome in order to ease food and energy price pressures that hit low-income households especially hard, the World Bank said.
For East Asia excluding Japan, 2011 growth will probably slow to 8.5 percent from 9.6 percent last year. The 2012 forecast showed a further slowdown to 8.1 percent.
Excluding China, the region will likely grow by 5.3 percent this year and 5.6 percent next year.
With global food prices forecast to decline toward the second half of 2011 and into 2012, food inflation should eventually ease but prices will still be relatively high.
Non-food inflation has remained "moderate" but countries cannot afford to be complacent, the World Bank said, particularly when interest rates are still well below levels seen before the financial crisis struck in 2008.
"There is a risk in some countries that if the current loose monetary policy setting continues for an extended period, inflationary pressures from food may instigate a wage-price spiral, which over time could push up non-food inflation, hamper competitiveness and slow growth," it said.
In South Asia, growth is expected to slow to 7.5 percent this year from 9.3 percent in 2010. For 2012, the forecast shows a modest pick-up to 7.7 percent.
"This slowdown partly reflects macroeconomic policy tightening aimed at curbing stubbornly high price pressures and reducing large fiscal deficits," the World Bank said.
Source: www.reuters.com
After a torrid 2010, some moderation was welcome in order to ease food and energy price pressures that hit low-income households especially hard, the World Bank said.
For East Asia excluding Japan, 2011 growth will probably slow to 8.5 percent from 9.6 percent last year. The 2012 forecast showed a further slowdown to 8.1 percent.
Excluding China, the region will likely grow by 5.3 percent this year and 5.6 percent next year.
With global food prices forecast to decline toward the second half of 2011 and into 2012, food inflation should eventually ease but prices will still be relatively high.
Non-food inflation has remained "moderate" but countries cannot afford to be complacent, the World Bank said, particularly when interest rates are still well below levels seen before the financial crisis struck in 2008.
"There is a risk in some countries that if the current loose monetary policy setting continues for an extended period, inflationary pressures from food may instigate a wage-price spiral, which over time could push up non-food inflation, hamper competitiveness and slow growth," it said.
In South Asia, growth is expected to slow to 7.5 percent this year from 9.3 percent in 2010. For 2012, the forecast shows a modest pick-up to 7.7 percent.
"This slowdown partly reflects macroeconomic policy tightening aimed at curbing stubbornly high price pressures and reducing large fiscal deficits," the World Bank said.
Source: www.reuters.com
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