Currently, central banks around the Asia-Pacific region have made two pillars worries worries that inflation, which is driven by fuel costs and who is negatively impacted on economic growth through the global economic slowdown. The usual weapon is used and endorsed recently by the political decision-makers, is restrictive monetary policy, liquidity means pressed out of the market by the higher interest rate. However, this period of free use of the possible decrease in demand both at home is to be limitedinternationally.
At the international level, export growth in the region has been supported by foreign markets, especially the developed countries. Although the U.S. may not be the biggest trading partner in terms of exports for some countries, his thirst for goods from other nations that the indirect purchasing in large numbers in the region of influence on export growth. And high dependence on exports to fuel internal growth affect the growth prospect.
Driven by lowInterest rate before the mortgage crisis have been taken into account claims in the U.S. by loans and debts from around the world, China, Japan, Middle East, which hold large U.S. government claims. The liquidity created channeled to pop-up requirements for toys from China, oil from the Middle East and manufacture of products from India and Japan. Some of these countries like China and India, and some of the emerging countries such as Indonesia, Vietnam and Malaysia are the major actors in regional trade.For example, China's most important buyers of intermediate goods production, but large quantities of finished goods produced in the region and the U.S. are sold. Vietnam and Indonesia, are fast becoming investment targets due to their low labor costs. The network of regional trade has a common goal and hope of the big market in Europe and the USA. Thus any hiccups in the U.S. economy has affected the entire network.
When oil prices escalated in many countries in theRegion have begun to cut subsidies, because the burden of USD140 per barrel is unbearable. Malaysia, Indonesia, Vietnam, India and China, which are newly recorded subsidies channeled to other development policies. This unpopular move, however, has a negative impact on low and middle income countries. Higher proportion of income is now allocated and spent on fuel and foodstuffs. The spillover can make noticeable increase in the price of bread, rice, vegetables, milk and meal frequency incut off and buying more fuel-efficient cars has increased. The characters around is dark, decreased domestic demand and consumer sentiment is.
Against this background, the stage is now at higher interest rates to encourage credit expansion close to the lower consumption. But at the same time, the fear that tighter lending hinders growth and consequently lower fuel consumption, economic growth, is already under stress, looms. More importantly, the tighter monetary policycurrencies could appreciate the country and lead products are less competitive. As the U.S. currency is weak now because of the low interest rates and other worries of economic recession, an appreciation of regional currencies will not help to export growth, the region depends so much. But take care of the inflation began pop-up radar in the central-inch display, the workers are now offset by asking for higher wages to higher living costs. If the wage-price spiral effect fromControl, it may justify intervention, provided it does not negatively on the manufacturing industry.
It really is a stressful time, as both inflation and slowing economic stagflation could be regional, or when inflation is slow to trigger combat economic. There is never a decoupling of Asian economies from the U.S. economy in the globalized world.
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