Singapore - Asia-Pacific growth predictions are limited by
inflationary pressures, prompting a rating agency Tuesday to revise
downwards its expectations for the region in 2008 and 2009.
A key conclusion from a quarterly assessment of the region
indicates that the 'main threat to growth has shifted from the
slowdown in the United States to inflationary pressures and the
efforts by the region's governments and central banks to tackle
them,' the Standard & Poor's rating agency said.
'While the outlook has become somewhat more pessimistic, growth
momentum will keep the region growing at respectable rates,' it
noted.
'With countries allowing domestic fuel prices to increase even
partially, there is little question that, as long as oil prices
remain at current levels, or even decline moderately, the price
adjustments will keep up the pressure on inflation rates,' said Subir
Gokarn, chief economist of S&P Asia-Pacific.
A stable first-quarter performance, buoyed by robust domestic
demand in countries such as China and India, has shifted the region's
monetary-policy priority toward curbing inflation, at the cost of
growth, Gokarn said.
'Despite growth slowing down in the second quarter,
inflation-controlling measures continue,' he said.
As money-tightening measures begin to take effect, inflation
rates are expected to come down in 2009, with a hardening of interest
rates into 2009, Gokarn said.
While oil prices may not rise next year, they are expected to
remain relatively high, putting pressure on the current accounts of
most of the countries in the region, he added.
USA
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