ASIAN ECONOMIC MIRACLE IS AT RISK ALL OVER AGAIN
William Pesek
Bloomberg, June 4, 2008
Depending on whom you ask, China is either on the verge of a big slowdown or an inflation surge. Some worry Asia's second-biggest economy faces both risks.
China's situation suggests Asia is on the cusp of its worst couple of years since 1997. From Seoul to Jakarta and from Beijing to New Delhi, officials are grappling with a rapidly worsening inflation picture.
It would be nice if there was less concern about the phenomenon and more action to address it. Asia may be nearing the point of no return -- one where the region's so-called economic miracle goes off the rails anew.
Asia isn't about to revisit the darkest days of 1997 and 1998. It was then that speculators tested central banks' resolve to defend currencies. Thailand's devaluation in July 1997 set in motion a crisis that suspended the Asian miracle. It prompted investors to leave Asia and sent contagion around the globe.
A decade later, Asia faces the flipside of that experience. The turmoil of the 1990s was about deflation and recession; the situation today involves overheating. Central banks may already be remiss in a different way than they were during the last crisis: They are falling behind the inflation curve.
“Inflation really has become THE issue,” says Richard Grainger, a director at Barclays Capital in Hong Kong.
William Pesek
Bloomberg, June 4, 2008
Depending on whom you ask, China is either on the verge of a big slowdown or an inflation surge. Some worry Asia's second-biggest economy faces both risks.
China's situation suggests Asia is on the cusp of its worst couple of years since 1997. From Seoul to Jakarta and from Beijing to New Delhi, officials are grappling with a rapidly worsening inflation picture.
It would be nice if there was less concern about the phenomenon and more action to address it. Asia may be nearing the point of no return -- one where the region's so-called economic miracle goes off the rails anew.
Asia isn't about to revisit the darkest days of 1997 and 1998. It was then that speculators tested central banks' resolve to defend currencies. Thailand's devaluation in July 1997 set in motion a crisis that suspended the Asian miracle. It prompted investors to leave Asia and sent contagion around the globe.
A decade later, Asia faces the flipside of that experience. The turmoil of the 1990s was about deflation and recession; the situation today involves overheating. Central banks may already be remiss in a different way than they were during the last crisis: They are falling behind the inflation curve.
“Inflation really has become THE issue,” says Richard Grainger, a director at Barclays Capital in Hong Kong.
(...) [artículo aquí]
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