ASEAN KEY DESTINATIONS
Asian economies cope with success
At opposite ends of Asia, Singapore in Southeast Asia and China in North Asia are coping with the success of their dynamic economies. In Singapore it is expected that growth will be 4 percent to 6 percent this year, topping the government’s projection. The jobless rate is around 2 percent but the danger to the Singapore economy is what the Singaporeans term over-heating and inflationary pressures as the deluge of cheap money makes everything more expensive.
Finance Minister Tharman Shanmugaratnam says that inflation in Singapore is expected to rise further in the first quarter of 2011 before moderation occurs.
Vishnu Varathan, an economist at Capital Economics said, “It is imperative that China and India get a grip on inflation.”
And in China, foreign reserves hit a record high at the end of 2010 as new loans topped the official target. The country’s foreign currency reserves expanded 18.7 percent from the previous year to US2.847 trillion by the end of December.
Foreign exchange earned by Chinese exporters is changed for yuan with the central bank a policy criticized by China’s trading partners for greatly undervaluing the currency.
Inflation is the #1 issue in China as the central bank raised the interest rate for the second time in less than three months and ordered lenders to up reserves, limiting the amount of money available for lending.
Singapore and China are not alone in dealing with inflationary pressures but in view of their recent economic success it will be noteworthy to see how they cope with the economic challenges coming in 2011.
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