Deflation v/s Inflation, which one is more risky ?

by khalid on 09/08/2009 · 2 comments

Deflation is a bigger risk to Asian economies than inflation, so it is important to boost final demand . The development lenders are concerned that economies could be left with weak domestic demand once fiscal stimulus spending in many countries expires.

At the moment, it is more important to get demand up. Our view on deflation is a manageable risk for Asia, but it does need rather careful monitoring.

China’s consumer price index (CPI) is expected to have fallen 1.7 percent in July from a year earlier for the sixth consecutive month of decline. Similarly inflation has reached a nine-year low in South Korea, 22-year low in the Philippines and 33-years low in India. Consumer prices have also fallen for the first time in two decades in Malaysia.

Asian policy makers will have to be mindful of the risks of inflation as their economies return to normal growth rates, he said. Should Asia’s major export markets fail to recover, that would pose a risk to the V-shaped bounce in Asian growth.

Shifting to domestic demand-driven economies is also important because the region cannot rely solely on trade with China.

Related Posts Plugin for WordPress, Blogger...

Leave a Comment

{ 2 comments… read them below or add one }

Meamwye August 10, 2009

Informative post. Thanks!

Reply

khalid August 10, 2009

Hi Meamwye
thanks for visiting and encoureging words.
khalid

Reply

Previous post:

Next post: