ADB official says Asian economy could grow at slower pace than expected

TOKYO, March 7 Kyodo - A senior official of the Asian Development Bank said the Asian economy could grow at a slower pace than expected due to growing inflationary pressures, warning against higher crude oil prices caused by instability in the Middle East.
''It is likely that we will be lowering our growth forecast,'' while the bank now expects the Asian economy to grow 7.3 percent in 2011, Rajat Nag, the ADB managing director general, told Kyodo News in a recent interview in Tokyo.
''If the (current) situation in the Middle East continues, it could start affecting'' economic growth in Asian countries, with rising petroleum prices fueling inflation, he added.
His remarks came as concerns are intensifying that the political confusion in the Middle East could push up crude oil prices further, weighing on business confidence of Asian companies and undermining the region's economy across the board.
The key April delivery for West Texas Intermediate crude climbed Friday in New York, closing above $104 per barrel to hit its highest level in about two years and five months, on the deteriorating situation in Libya.
As food prices also remain on an upward trend, Nag said the Asian financial authorities should keep their eyes on how inflation will hurt their economies down the road.
But he emphasized that he does not expect for now that the Asian economy will receive a heavy blow from the higher oil prices as governments and central banks in each nation have begun to take necessary measures to grapple with the cost-push inflation.
Some Asian countries such as India and China have already started to raise interest rates, which could help ease the adverse effect of the rising oil prices on their economies, Nag added.
''We currently do not see the significant direct impact'' of gains in petroleum prices on Asia, he said.
The ADB, established in 1966 and based in Manila, has 67 member-economies.