Developing Asian economies to register solid growth: ADB
By Asad Cheema

ISLAMABAD—Developing Asian economies will register solid growth in 2008 despite a coincident slowdown in major industrial economies,surging food and fuel prices and a simmering credit crisis in the United States, the Asian Development Bank (ADB) says in a new major report.
ADB’s flagship annual publication, Asian Development Outlook 2008 (ADO) released on Wednesday, forecasts developing Asian economies to expand at 7.6 percent in 2008 and 7.8 per cent in 2009. The region posted its highest growth in almost two decades in 2007, averaging 8.7 per cent.
“Asia will not be immune to the global slowdown, neither will it be hostage to it. It remains tied to global activity through traditional trade channels, and increasingly, through its closer integration in international financial markets,” said ADB Chief Economist Ifzal Ali.
Ali says favorable policy conditions and impressive productivity growth associated with Asia’s economic modernization and structural transformation will continue to keep the region on a strong growth path.
ADO warns that the risk of an inflation spiral in Asia is palpable and urges policymakers to keep a close watch on it. Despite a slew of administrative measures and subsidies that are reining in price rises, inflation is expected to spike in 2008 and could hit a decade-long regional high, the report says.
Inflation is expected to rise to 5.1 per cent in 2008 and gradually slide to 4.6 per cent in 2009. Price increases will be highest in Central Asia whereas it will remain in double digits.
ADO urges policymakers to tackle the problem at its root. For some economies, this may mean a more flexible exchange rate, while in others it mayneed a scrutiny of fiscal spending and priorities and, in some cases, targeted measures may be warranted to ease supply pressures that are piling on to cost pressures.