ASEAN KEY DESTINATIONS
Oil and food hit global economy
By David Swartzemtruber
The main villains in the global scenario are the costs of food and oil.
In the developing world, where most Asian economies fall, collective gross domestic product growth is projected to slow from 7.3 percent in 2010 to about a 6.3 percent pace each year from 2011 to 2013. Domestic food prices have risen 7.9 percent in developing countries since last June. But local prices may rise further as international price changes slowly pass through into domestic markets, the World Bank said.
The prospects for continuing pressure on food prices is likely to continue throughout 2011. In a report tomorrow, the U.S. Department of Agriculture probably will cut its forecast of global corn reserves before this year’s Northern Hemisphere harvest to 121.46 million metric tons. That would be down 17 percent from last year, the biggest drop since 1994, and would leave supplies at 14.5 percent of estimated consumption, the lowest ratio since 1974, government data show.
Wheat stockpiles have grown tighter after a drought damaged at least a third of Russia's crop last summer and the U.S. winter crop was affected by dry conditions.
The oil cartel, OPEC, is meeting today and there is an expectation that output may be increased to lower oil prices. Libyan oil output, which has dwindled to a trickle amid a pro-democracy revolt, accounted for about US$15 to US$20 of the roughly US$30 increase in oil prices from December to their February peak, officials said.
The developing countries sailed through the global downturn, providing the impetus for the global recovery. However, the rising economies in those countries have pushed demand up for food commodities.
The last half of 2011 appears to be a stressful period for the economies in Asean .
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