Goldman Sachs: Asia does not need to adopt overly aggressive austerity measures

Goldman Sachs reported March 9 that the results of the study team Model analysis showed that while higher oil prices pushed up inflation while domestic food prices were relatively subdued, Asian economies did not have to adopt "overly aggressive additional austerity measures" that could slow domestic growth. The Goldman Sachs analysis of the impact on oil prices shows that if crude oil prices rise by 10%, the total GDP of Asian economies will fall by 0.14%. According to this model, Taiwan, Thailand, Singapore and North Korea's GDP will fall 0.3%, Hong Kong, India and Indonesia's GDP will fall by 0.2%. The impact on mainland China's GDP was relatively small, down only 0.1%.　　In another two countries, the Philippines and Malaysia, respectively, are affected by remittances inflows and oil exports, and GDP will not be negatively affected or even rise.　　Global crude oil prices are up 10% per cent, and overall inflation in Hong Kong and China will rise by 0.09% and 0.11% respectively, while Malaysian and Indian inflation will rise by more than 0.2% and Indonesia by more than 0.4%, according to an analysis of the overall inflation impact on oil prices. Goldman Sachs says the fiscal balance is better than feared, as long as the Indonesian authorities do not adjust the prices of major currencies, so that inflation does not happen entirely.　　In 2005, Goldman Sachs, through its model, predicted that the general consumer index would rise by 0.08% per cent for Asian administrative measures against the currency, but an average increase of 0.17% per cent. Goldman Sachs analysts believe that the current regional governments need to make a difficult decision-whether to fight inflation or growth.　　Asian economic policymakers should see the impetus from inflation, given the risk that curbing inflation would lead to a drop in growth. In general, austerity will hamper the development of Asian markets.　　But within Asian economies, there is also uncertainty about the price of oil and its economic relevance because of differing market development and preferences. Goldman also expects the dollar to continue to fall against the Philippine peso and the dollar against the renminbi.