Oil and Food Prices Could Cost 1.4 % of GDP in Emerging Asia
The food crisis and rising oil prices could cost 1.4 percentage point growth in gross domestic product (GDP) of ten “developing” Asian countries in 2008, according to a study by the Asian Development Bank published yesterday.
In this report, the ADB makes projections to try to estimate what might be the impact of the food crisis on the growth of nine Asian countries plus Hong Kong: China, India, Indonesia, South Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand.
Should the rise in food prices and those of oil in the first quarter would continue throughout 2008, “the regional GDP growth would decline by 1.41 percentage point” in 2008, according to the ADB.
This calculation is made on the basis of flexible interest rates, assuming that central banks will meet them in an attempt to curb inflation stemming from this situation.
In 2009, the decline would be even more pronounced (4.15 points), because these countries would also suffer from declining world growth, accentuated their homes by “the substantial drop in demand for their exports”, given that these countries “are heavily dependent on demand from industrialized countries,” according to ADB.
Thus, in 2009, China will lose 5.86 points growth, and the Philippines 3.48 points.
These prospects are published while the ADB has made the food crisis a key theme of its 41st annual meeting in Madrid.
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