Singapore (AsiaNews/Agencies) - The main problem for Asia is inflation, especially because of the rapid rise in food and energy prices. This is the urgent warning from economists meeting in Singapore, where a conference on economic development in Asia is underway.
The analysts of Merrill Lynch, which organised the event, observe that because Asia has more extensive ties with the European Union than with the United States, the recession in the U.S. has not affected its economic development, which is expected to remain strong. There is also cautious optimism over the situation in the U.S. William McDonough, vice-chairman of Merrill Lynch, observes that liquidity is returning to the financial markets, and "we are seeing the beginning of the end of the subprime crisis".
Instead, the "key macro risk for Asia", according to Timothy Bond, chief economist for Asia at Merrill Lynch, is inflationary pressure, which will not come to an end soon, in part because the steep rise in food and energy prices could cause social instability, because it affects essential staples and harms above all the least prosperous segment of the population. The subsidies given by many Asian governments to support consumers are not a solution, but simply risk exhausting budget surpluses.
Lim Hng Kiang, Singapore's minister for trade and industry, agrees that "a key priority for many Asian governments" is "mitigating the impact of strong inflationary pressures", which bring "increasing food prices and high oil prices", forcing public intervention to diminish the impact on the population.