Asia's Economy Grows Fast Instead Inflation Threat

By ONE Liners Agency

In a recent report published by Asian Development Bank (ADB), Asia economy has forecast to grow strongly though inflation would a big problem to tackle with. According to the report economy is expected to grow by just under 8% in 2011. The annual report says Asia will expand more in next two years.

However, the growth rate of Asian economy would be largely hamper by the inflation, which is the biggest challenge and could lead to social tension.

The report also enumerates the decrease demand of goods and services from recession-hit richer countries.

The ADB's chief economist Changyong Rhee said that the developing countries, mainly from Asian regions fought hard against global recession, and now consolidating its recovery and rapid expansion in the region's two giants - the People's Republic of China and India.

Mr. Rhee was also hopeful that there had been minimal effect of the region's economy irrespective of certain natural disasters such as last month Japan's earthquake.

"Under the assumption there is no further deterioration in the nuclear situation, I really don't think the impact will be that great," He said.

He further said China and India would continue be the driving force for the regional economic recovery as well as global. However, these two regions have experienced slower growth rate compare to other regions.

Mr. Rhee worried about the inflation, which could be the biggest hurdle for policy makers in the regions. He also said that the inflation would be accelerate because of geopolitical tensions in the Middle East and the nuclear crisis in Japan, and subsequently there are high possibility of increase in oil price.

The report also emphasizes on just tighter monetary policy to control inflation, but stresses on flexible exchange rates.

It is reported that in 45 Asian economies inflation rises to 5.3% in 2011, from 4.4% in 2010. The report also warned about social unrest due to high price rise of essential commodities.

Japan Tremor Trembles Asian Economy

By ETHAN Markoff

A massive disaster not only ruins the place of occurrence but evidently affects the neighboring lands, and in a few cases, spreading across the global pitch. Since the devastation in Japan almost a week back, the economic consequences have already been felt across Asia. The destructions from the natural calamity have been huge and the country is still recuperating from the damages. While the efforts to restore the normalcy continue, the economic backlash on various sectors and industries has created ripples in the economic world.

Countries that export energy and raw materials could find it difficult now as the demand is low Japan. On the flip side, there are others who are depended on Japan for manufacturing components will be revitalizing themselves for shortages in supply.

As for example, Japan is the biggest rival of South Korean companies, who, in the short-term are already gaining from the shutdown in manufacturing in Japan.

"In terms of semiconductors, auto and steel companies, South Korean and Japanese companies are competitors," said Huh Jae-hwan from Daewoo Securities in Seoul.

He said due to unable to meet the demand and orders, the whole flow would be moved to the next biggest Korean manufacturers.

Nevertheless, the benefits will only continue as long as the situation in Japan does not manufacturing raw materials that it used to supply.

The neighboring Chinese electronic industry is likely to be affected by the disruption in supply. It is noted that Japan is China’s biggest source of imports almost adding 13% of its import.

Utilizing the raw components to assemble intro final products, China exports its products around the globe.

Not only the electronic products (The price of a Nikon camera has jumped already by 2,000 yuan), but also the essential commodities prices have already risen in China because of demand in Japan.

Taiwan is facing a similar kind of situation as the electronic manufacturers in the country could suffer as their raw materials are mostly imported from Japan.

Australia and Indonesia are proved to be the best source for thermal coal, iron ore and liquefied natural gas (LNG). Japan’s main concern is now the acute power shortages and as in immediate future, when the construction and rebuilding will begin, the countries like Australia and Indonesia will stand to gain further.

The rising economic country like India will face the music in a more indirect way. Japan is the major source of foreign direct investment into the country and considered as a long-term investor. If the Japanese economy is in jeopardy, the long-term investment into India could also suffer.