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ADB: Asiaâ€™s growth to moderate on rising inflation, weak global demand

28 July 2011 12:14 (UTC +04:00)

Baku - APA-Economics. After a strong rebound in 2010, economic growth in emerging East Asia will moderate this year and in 2012 as authorities continue to battle inflation and as advanced economies try to shore up an anemic recovery, says the July edition of the Asian Development Bankâ€™s (ADB) Asia Economic Monitor (AEM) released today.

The report forecasts aggregate GDP growth for emerging East Asia economies of 7.9% in 2011 and 7.7% in 2012. In 2010 aggregate growth reached 9.3%.

The ADB report highlights the risk of rising inflation leading to wage-price spirals that could derail the regionâ€™s growth. Other risks to the outlook include a more tepid than expected recovery in Japan and unresolved debt problems in the US and eurozone; increasing financial market volatility; and destabilizing capital flows.

The report also contains a special section on how authorities can respond to inflation driven by surging commodity prices. It suggests that a pragmatic approach to a range of policies may help governments manage the inflationary impact of sustained and volatile changes in commodity prices. It also points out that greater exchange rate flexibility can help mitigate the effects of global commodity price surges on domestic prices.