Emily Vogl, Frank Vogl
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IIF Releases Asian Regional Economic Overview at the 2008 Annual Meeting of the Asian Development Bank in Madrid
Madrid, Spain and Washington DC, May 4, 2008 — The IIF today released its Asian Regional Economic Overview at the annual meeting of the Asian Development Bank and noted that, "Economic activity in the leading emerging markets in Asia should hold up well despite less favorable global economic and financial conditions. Real GDP growth for the group is set to expand by around 8 percent this year, down moderately from more than 9 percent in 2006 and in 2007."
The IIF, the global association of financial services firms with over 370 member institutions, said, "Surging food prices risk undermining social stability and fueling inflationary expectations, but inflation is likely to recede over the near term. Many governments in the region are also using the fiscal wherewithal they have to cushion the adverse impact, while central banks are leaning toward tightening to dampen inflationary expectations."
Additional key summary findings of the report include:
- Asian exchange rates have been appreciating against the dollar, but entrenched concerns about hampering exports has meant that the adjustment so far has fallen short of that dictated by the economic fundamentals.
- The Chinese economy has again been brought back from the brink of overheating with real GDP growth set to moderate from almost 12 percent in 2007 to 10 percent in 2008. The boom in India started to fade about a year ago and real GDP growth is set to slip to 8 percent this year from almost 9 percent last year.
- Renewed momentum during 2007 lifted year-on-year real GDP growth for Indonesia, Korea, Malaysia, the Philippines and Thailand from 4.8 percent in the first quarter to a five-year high of 6.1 percent in the fourth quarter.
- Despite close trade links, many Asian economies have compensated for the slowdown in the U.S. economy by diversifying to new markets. The year-on-year increase in U.S. imports from the leading emerging markets in Asia slipped to 5 percent in the fourth quarter of 2007 from 15 percent a year earlier, but total export growth was sustained at more than 20 percent annually for the past three years.
- Although China has been allowing more exchange rate flexibility, the gradual pace of appreciation against the dollar will have limited impact redressing its large balance of payments surplus. China's official foreign exchange reserves reached $1.7 trillion in March and are likely to exceed $2 trillion by the end of this year.
Emily Vogl, Frank Vogl