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.
South Korea has adjusted its electronic arrival card system to no longer list Taiwan as a part of China, a move that the Ministry of Foreign Affairs said would help facilitate exchanges between the two sides. South Korea previously listed “Taiwan” as “Taiwan (China)” in the drop-down menus of its online arrival card system, where people had to fill out where they came from and their next destination. The ministry had requested South Korea make a revision and said it would change South Korea’s name on Taiwan’s online immigration system from “Republic of Korea” to “Korea (South),” should the issue not be
The Legislative Yuan’s Finance Committee yesterday approved proposed amendments to the Amusement Tax Act (娛樂稅法) that would abolish taxes on films, cultural activities and competitive sporting events, retaining the fee only for dance halls and golf courses. The proposed changes would set the maximum tax rate for dance halls and golf courses at 50 and 20 percent respectively, with local governments authorized to suspend the levies. Article 2 of the act says that “amusement tax shall be levied on tickets sold or fees charged by amusement places, facilities or activities” in six categories: “Cinema; professional singing, story-telling, dancing, circus, magic show, acrobatics
Tainan, Taipei and New Taipei City recorded the highest fines nationwide for illegal accommodations in the first quarter of this year, with fines issued in the three cities each exceeding NT$7 million (US$220,639), Tourism Administration data showed. Among them, Taipei had the highest number of illegal short-term rental units, with 410. There were 3,280 legally registered hotels nationwide in the first quarter, down by 14 properties, or 0.43 percent, from a year earlier, likely indicating operators exiting the market, the agency said. However, the number of unregistered properties rose to 1,174, including 314 illegal hotels and 860 illegal short-term rental
INFLATION UP? The IMF said CPI would increase to 1.5 percent this year, while the DGBAS projected it would rise to 1.68 percent, with GDP per capita of US$44,181 The IMF projected Taiwan’s real GDP would grow 5.2 percent this year, up from its 2.1 percent outlook in January, despite fears of global economic disruptions sparked by the US-Iran conflict. Taiwan’s consumer price index (CPI) is projected to increase to 1.5 percent, while unemployment would be 3.4 percent, roughly in line with estimates for Asia as a whole, the international body wrote in its Global Economic Outlook Report published in the US on Monday. The figures are comparatively better than the IMF outlook for the rest of the world, which pegged real GDP growth at 3.1 percent, down from 3.3 percent
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