A United Nations economic survey for Asia Pacific says the region is now a leading driver of global economic growth, continuing a dramatic recovery from last year. U.N. economists warn that rising oil and food prices especially threaten millions of the region's poor.
U.N. economists say that although Asia continues to experience robust regional growth, there are still fears of rising inflation through food and fuel prices.
The annual survey released Thursday by the U.N.'s Economic and Social Commission for Asia and the Pacific (UNESCAP) forecasts growth at more than seven percent for major developing economies across the region. Economists say India and Indonesia's booming economies lead Asia, buoyed by their "robust consumption and investment".
China's economy is forecast to grow by more than nine percent due to government efforts to shift the economy to greater domestic consumption.
UNESCAP chief economist, Nagesh Kumar says foreign speculators drawn to Asia's high growth rates are contributing to higher inflation. The foreign inflows have led to excessive investment in areas such as property leading to vulnerable asset bubbles.
Food, fuel crisis
Nagesh says the greatest fear is a return of a similar food and fuel crisis that occurred in 2008. The report says food price have risen by up to 35 per cent across several countries.
"The key downside ... the major challenge that the region is facing is arising from the inflationary pressures which are largely driven by the dramatic rise of food and oil prices since August 2010," said Nagesh. "We find that if oil prices continue to rise it could affect the growth outlook by one percent in the region."
The survey warns that the high food and fuel prices could mean that 42 million additional people across Asia and the Pacific remain in poverty, on top of the 19 million affected in 2010.
Across the region there are more than 950 million people living on less than $1.25 a day. The report says expanding consumption through higher wages; better employment opportunities and expanding social protection programs are needed to boost domestic growth.
The report also evaluates Japan's economy following the March 11 earthquake and tsunami.
UNESCAP economists says while Japan's economy faces great uncertainty, the quake's economic toll be short term with some boost from reconstruction efforts later.
U.N. economists also called on the world's major economies to help the situation in Asia, by acting decisively to moderate volatile oil and food prices. Economists recommended regulating commodity markets to reduce speculation and to "discipline" industries that convert food into biofuels.