New Delhi: A slowdown in industrial growth will bring down the crude oil prices in the international market, while food prices will continue to remain high fueling inflationary pressure in 2008, says the UN-ESCAP survey.
“Oil prices are expected to decline from the record levels in 2008 due to slow pace of industrial growth, led by the United States,” said the UN Economic and Social Survey of Asia and the Pacific (UNESCAP).
The survey, however, says that food prices are likely to remain high, posing greater inflationary risks because food accounts for a substantial proportion of consumer spending.
It further pointed out that major currencies in the Asian region, including rupee, would continue to appreciate against the dollar, “driven by the unwinding of large US imbalances with the rest of the world and the turmoil in global financial markets”.
Referring to frequent rate cuts by Federal Reserve, the survey said: “Countries in the region will face twin blows - reduced demand and less competitive exports to the US”.
Although the currency appreciation sheltered the Asian economies from high oil and food prices, “it dealt a blow to the competitiveness of exports”.
The survey said the countries whose currencies appreciated the most faced intensive competition from low cost producers in low-technology manufactured goods and agriculture commodities.