China and India are set for slower but robust economic growth this year although sharply higher inflation looms as a key threat amid soaring global food and oil prices, the OECD said yesterday.
China is set to grow 10 percent, against 11.9 percent last year, as exports slip amid a world slowdown and anaemic US expansion, the Organization for Economic Cooperation and Development (OECD) forecast in its biannual Economic Outlook.
India’s expansion will fall to 7.8 percent this year from 8.7 percent last year, partly owing to higher interest rates, said the report from the grouping of 30 industrialized nations, which does not include the two Asian giants.
“Growth in the emerging markets, while moderating, remains strong, especially in China,” the report said, adding the odds were improving that global financial market turmoil had passed its peak.
Asian stock markets began sliding last year after a ballooning default crisis among so-called “subprime” — or riskier — US mortgages, which has led to huge losses, a global credit crunch and a world economic slowdown.
Exports from Asia to the ailing US economy have slowed but recent official data indicated trade within Asia and shipments to other parts of the world were holding up.
The EU had now become China’s biggest export market, but wage and price inflation were set to erode its export competitiveness, the OECD said.
Buoyant incomes were also helping Chinese consumers, supporting the economy this year and next year, when growth is forecast at 9.5 percent, it said.
“The Chinese economy is slowing to a more sustainable pace and there are early indications that the pattern of growth is beginning to rebalance away from net exports to domestic demand,” the OECD said.
But rising inflation posed a key risk in India and in China, where the devastating earthquake in Sichuan Province, a key farming area, could push up food prices, the OECD added.
Annual inflation in both countries is more than 8 percent as the prices of staple foods and crude oil soar, forcing India to announce a hike in subsidized fuel prices yesterday.
The OECD expects Indian growth to speed up next year, but said the principal risk to its forecasts was “inflation not moderating” despite hikes in borrowing costs and other steps by the Indian authorities to cool prices.
For China, the body said that the “longer inflation is allowed to persist, the higher the risk of rising inflation expectations, necessitating more of a slowdown than currently projected.”
There are fears rising inflation across Asia will hit consumer spending, squeeze business profits and force up interest rates, slowing growth.
Key numbers from a batch of Asian nations have shown unexpectedly strong economic expansion in the first quarter of this year, but many experts predict worse to come.
Australia became the latest nation to post surprisingly good figures, growing at an annual rate of 3.6 percent in the three months to March, prompting Canberra to warn that borrowing costs could rise to tame prices.
But the OECD said growth was likely to slow to below 3 percent in Australia this year and next year in the wake of higher borrowing costs and the global slowdown.
The Paris-based institution projects growth in South Korea will slow to 4.3 percent this year before rising to 5 percent next year. It sees New Zealand growth slowing sharply to 1.3 percent from more than 3 percent last year.
Japanese growth is forecast to slow to 1.7 percent this year from more than 2 percent last year, and to slip further to 1.5 percent next year.
Japan, Australia, South Korea and New Zealand are all OECD members.
Japanese Prime Minister Sanae Takaichi yesterday lavished US President Donald Trump with praise and vows of a “golden age” of ties on his visit to Tokyo, before inking a deal with Washington aimed at securing critical minerals. Takaichi — Japan’s first female prime minister — pulled out all the stops for Trump in her opening test on the international stage and even announced that she would nominate him for a Nobel Peace Prize, the White House said. Trump has become increasingly focused on the Nobel since his return to power in January and claims to have ended several conflicts around the world,
UKRAINE, NVIDIA: The US leader said the subject of Russia’s war had come up ‘very strongly,’ while Jenson Huang was hoping that the conversation was good Chinese President Xi Jinping (習近平) and US President Donald Trump had differing takes following their meeting in Busan, South Korea, yesterday. Xi said that the two sides should complete follow-up work as soon as possible to deliver tangible results that would provide “peace of mind” to China, the US and the rest of the world, while Trump hailed the “great success” of the talks. The two discussed trade, including a deal to reduce tariffs slapped on China for its role in the fentanyl trade, as well as cooperation in ending the war in Ukraine, among other issues, but they did not mention
REASSURANCE: The US said Taiwan’s interests would not be harmed during the talk and that it remains steadfast in its support for the nation, the foreign minister said US President Donald Trump on Friday said he would bring up Taiwan with Chinese President Xi Jinping (習近平) during a meeting on the sidelines of the APEC Summit in South Korea this week. “I will be talking about Taiwan [with Xi],” Trump told reporters before he departed for his trip to Asia, adding that he had “a lot of respect for Taiwan.” “We have a lot to talk about with President Xi, and he has a lot to talk about with us. I think we’ll have a good meeting,” Trump said. Taiwan has long been a contentious issue between the US and China.
GLOBAL PROJECT: Underseas cables ‘are the nervous system of democratic connectivity,’ which is under stress, Member of the European Parliament Rihards Kols said The government yesterday launched an initiative to promote global cooperation on improved security of undersea cables, following reported disruptions of such cables near Taiwan and around the world. The Management Initiative on International Undersea Cables aims to “bring together stakeholders, align standards, promote best practices and turn shared concerns into beneficial cooperation,” Minister of Foreign Affairs Lin Chia-lung (林佳龍) said at a seminar in Taipei. The project would be known as “RISK,” an acronym for risk mitigation, information sharing, systemic reform and knowledge building, he said at the seminar, titled “Taiwan-Europe Subsea Cable Security Cooperation Forum.” Taiwan sits at a vital junction on
RSS