The Asian Development Bank (ADB) on Tuesday said developing Asian economies will revert to a more moderate growth outlook of 7.5 percent this year and experience a high inflation rate of 7.8 percent.
In a latest report, ADB said economic growth would further dropto 7.2 percent next year after Asian economies posted fastest growth of 9 percent in nearly two decades in 2007.
The Asian Development Outlook 2008 Update said the continued elevated level of international oil and food prices, the persistence of high inflation, and a prolonged slowdown in industrial countries, are the factors damaging the Asian economies' health.
"While oil prices are likely to soften somewhat in the short run, they will remain high and volatile in the long run. High oil prices are here to stay. And as food prices are heavily influencedby oil prices, high food prices are here to stay as well," says Ifzal Ali, Chief Economist of the Manila-based multilateral development bank.
ADB also warns that inflationary pressures in the region are mounting and could boil over if left unaddressed.
It said the inflation spike now seen throughout developing Asiacannot be blamed solely on cost-push factors, such as high global commodity prices.
Analysis of the report shows that demand-pull factors, in particular excess aggregate demand and inflation expectations, account for a larger share of variations in domestic price inflation.
(Xinhua News Agency September 16, 2008)