Inflation cited as region's No 1 threat

Inflation cited as region's No 1 threat

Wednesday • April 2, 2008

THE World Bank has sliced 1.2 percentage points off its Singapore growth forecast and warned inflation will be the region's No 1 threat this year. It believes dealing with high food and fuel prices will be an even greater challenge to East Asian governments than US financial turmoil and a slowing global economy.

Singapore's inflation rate hit 6.5 per cent in February, slightly off January's 26-year high.

The World Bank cut its GDP forecast for Singapore from 6.4 per cent to 5.2 per cent, within the Government's revised official growth range.

"For all commodity prices, this is not a short-term problem," said Mr Vikram Nehru, World Bank chief economist for East Asia and the Pacific. "There may be volatility. They may come down for a while, but eventually we are expecting a relatively long period of elevated prices in metals, food and oil."

It's not just a Singapore problem. In China, inflation has surged to its fastest pace in 11 years, while consumer prices in Sri Lanka and Vietnam are hovering around 20 per cent. The World Bank believes East Asian governments should consider solutions like targeted subsidies to help the poor. — Esther Fung


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