Lehman Brothers yesterday slightly trimmed its forecast for economic growth in Asian countries excluding Japan to 7.2 percent for this year primarily because of accelerating inflation driven by import material prices.
In April, Lehman Brothers projected the region’s economy would expand at a 7.3 percent annual rate this year, slowing down from last year’s 9.1 percent growth.
The US investment bank kept its GDP growth projection unchanged for Taiwan at 3.9 percent for the year, though it expected inflation to rise faster at an annual 4.3 percent, up from its previous estimate of 3.8 percent.
Lehman Brothers said China might post weaker economic growth at 9.6 percent this year, following a previous estimate of 9.8 percent. As for India, the bank maintained its GDP growth projection unchanged at 7.5 percent.
‘HOLDING UP’
“Asian exports are holding up in value terms, but adjusted for export price inflation, the volume of export growth is slowing,” Lehman economist Rob Subbaraman wrote in a report released yesterday.
Subbaraman said the cost-pushing inflation shock topped his worries “because the longer it lasts the more it will hurt growth in a region heavily dependent on imported oil.”
Lehman Brothers raised its consumer price index (CPI) outlook to 6.7 percent for Asia this year from 6.1 percent forecast in April.
MACRO IMPACT
In China, “We think the biggest and most immediate macro impact will be on inflation,” wrote Sun Mingchun (孫明春), another Lehman Brother economist.
The US bank is still assessing the impact of the floods early this year and the earthquake in Sichuan last month.
Sun said the loss of agricultural output from the natural disasters and higher energy costs resulting from this week’s 20 percent hike in average fuel prices would be the main factors driving up China’s inflation this year.
Last month, Sun raised the forecast of China’s CPI inflation this year to 6.5 percent from 5.5 percent forecast in April.
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