Asia's economic growth to slow this year: S&P

By Kim Young-gyo
HONG KONG, March 16 (Yonhap) -- The Asia-Pacific region is likely to see its economic growth slow in 2011 as many countries are set to battle inflation following a robust economy last year, Standard & Poor's Rating Services (S&P) said Wednesday.
According to S&P, China's gross domestic product (GDP) is expected to grow 9.1-9.6 percent this year, down from 10.3 percent in 2010. The South Korean and Japanese economies are expected to grow 4.3-4.8 percent and 1.3-1.8 percent, respectively, this year. Last year, the two economies expanded 6.1 percent and 4.0 percent, respectively.
While economies in the Asia-Pacific region are likely to remain strong this year, Asian economies face inflationary pressure that could impair economic growth.
"Controlling inflationary pressure is a major challenge for policymakers in many economies, as labor shortages, capacity constraints, along with rising commodity and food prices push inflation beyond comfort ranges for many central banks," the credit appraiser said.
Consumer prices grew in most Asian countries, with inflationary pressures further building up this year. Last year's consumer inflation rate was 12 percent for India, 3.3 percent for China and 3 percent for South Korea.
South Korean and Chinese central banks started in the second half of last year to hike their benchmark interest rates, aiming to cool down rising consumer prices.
S&P said it expects that the region's central banks will continue to raise interest rates to help contain inflation. It warned that policy makers will deal with subsequent challenges associated with the region's capital inflows, which have the potential to fuel asset bubbles.
Meanwhile, the credit rating firm said it is too early to assess the impact of the worst earthquake in Japan on its economy.
"We expect the (Asia-Pacific) region to record another year of solid growth in 2011, after 2010 proved that Asia is emerging from the crisis in a strong position, even as the economic picture for Japan following the recent earthquake remains less clear," said Tom Schiller, head of S&P Asia-Pacific.