Inflation set to rise in Asia. Reconstruction of Japan will be expensive. Much of Thailand's debt is in Yen.
The World Bank has just released the important report: East Asia and Pacific Economic Update - Securing the Present, Shaping the Future March 2011 (Get free report).
Some of the important findings are summarized below.
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WORLD BANK: Thailand urged to cut subsidies, Economist says lowly paid need specific help by Somruedi Banchongduang
The World Bank is concerned about the fiscal burdens of Asia-Pacific and East Asian countries, urging their governments to cut subsidies of food and energy prices.
Vikram Nehru, the World Bank's chief economist for the Asia-Pacific region, said several countries including Thailand have subsidised their food and energy prices, which will clearly increase their governments' long-term fiscal burden.
The subsidies are unlikely to significantly benefit low-income earners and the governments need more specific measures to help them, he said.
"Higher inflation is a key risk factor for the region, while all the regional central banks have paid attention to the factor. Rising inflation and commodity prices, especially crop prices, will increase farmers' return rates as well. As a result, governments in the region should not control such prices," Mr Nehru said.
Thailand is among countries implementing subsidies for food and diesel prices while raising interest rates to curb inflation. The Bank of Thailand forecasts inflation to be in a range of 0.5-3.5% this year.
Mr Nehru said regional inflation rates tend to keep rising in line with global rates, which are mainly pressured by commodity prices. Japan's reconstruction after the deadly earthquake and tsunami seems likely to tighten inflationary pressure across the region.
It is also estimated Japan may need five years to rebuild from the catastrophe that has caused up to US$235 billion of damage, with a likely shaving of up to 0.5 percentage points from its economic growth this year, said the bank's report.
Damage to housing and infrastructure has been unprecedented, said the World Bank. A cost projection is $123 billion to $235 billion, with a private insurers' cost of $14 billion to $33 billion. It said the government will spend $12 billion on reconstruction in the current national budget and "much more" in the next one. Commodity prices are expected to shoot up on a surge in demand.
However, Japan's crisis is unlikely to have a significant impact on regional economies. Rising inflation in the Asia-Pacific and East Asian regions is mainly a result of China's fast growth and the countries' domestic consumption. The political crisis in the Middle East will cause oil prices to continue to rise.
"In the short term, the impact of the quake in Japan on the economies of regional developing countries is likely to be limited and temporary. It's still too early for a full assessment, which also depends on the situation of Japan's Fukushima nuclear power plant," Mr Nehru said.
Japan's real gross domestic product growth will slow but should start to pick up in the middle of this year as construction efforts kick in.
The World Bank forecasts the disaster's effect on Japan's economic growth will impact regional exports by 0.75 to 1.5 percentage points.
For the past five years, trade between the region's developing countries and Japan has accounted for 9% of the whole region's international trade, Mr Nehru said.
About 25% of East Asia's long-term foreign debts are denominated in Japanese yen, ranging from 8% in China to 60% in Thailand.
Thailand's foreign debts represent only 10% of the government's total debt, of which 60% is in yen.
Every 1% appreciation in the yen is likely to raise annual debt servicing on yen-denominated assets held by East Asia's developing nations by about $1 billion.
(Source: Bangkok Post, WORLD BANK, Thailand urged to cut subsidies, Economist says lowly paid need specific help, 22/03/2011, Somruedi Banchongduang, link)
urged - advised someone very strongly about what action should be taken วิงวอน
subsidies (verb) - when the government pays part of the cost of some activity เงินช่วยเหลือจากรัฐ
concerned - worried about something มีความกังวล
fiscal - related to government spending, connected with the government budget, i.e., public money เกี่ยวกับงบประมาณ
long-term fiscal burden - the difficulties of paying back, over a long period of time, money that was borrowed to pay for increased government spending in the short-term
energy - a supply of physical power that you have for doing things that need physical effort such as driving a car, running electrical devices and heating or air-conditioning your home (oil, coal and nuclear fission are all sources of energy)
subsidised (verb) - paid part of the cost of something ให้ความช่วยเหลือด้านการเงิน
burden - a responsibility, a difficult thing that must be done, a heavy load to carry ภาระ (See glossary)
significantly - in an important way อย่างสำคัญ
benefit - to help someone มีประโยชน์ต่อ
income - money that people receive from work or some other source, used for household consumption and savings
low-income earners - poor people, people who make only a small amount of money from their job
measures - actions taken to deal with a problem มาตราการ
more specific measures to Y - take action directly on problem Y (not as part of actions directed at the situation, in general)
inflation - the level of prices rising in the economy as a whole (See Wikipedia and The Economist glossary) ภาวะเงินเฟ้อ
key - important คนสำคัญ
risk - the possibility that something dangerous or unpleasant might happen ความเสี่ยง
factor - a fact or situation which influences the result of something ปัจจัย
key risk factor - something important and dangerous (that could influece or drive events in the future)
commodity - a good bought and sold in large amounts with every unit (kilo, liter, etc) the same (examples include oil, rice, corn, sugar, etc)
implementing - turning a plan into a functioning system นำมาใช้จริง
interest - payments made for the use of another's money for a period of time
interest rate - the percentage of the money borrowed (principal) paid each year as a fee for using the money (interest)
curb - to control or limit something that is harmful ระงับ, ควบคุม
forecasts - what experts say will happen in the future คาดการณ์
range - all the numbers between two numbers
regional inflation rates - the rate of inflation for all the countries in a region (here: ASEAN)
tend - to be likely to behave in a particular way or have a particular characteristic มักจะ
in line with - following, going in the same direction as
global - throughout the world ทั่วโลก
reconstruction - the process of building or creating something again that has been damaged or destroyed การสร้างใหม่, การประกอบใหม่
earthquake - a sudden shaking movement of the ground แผ่นดินไหว
pressure - a force causing change
tighten inflationary pressure - increase inflationary pressures, make inflation more likely
catastrophe - a disaster, an event that causes a lot of damage and makes a lot of people suffer ความหายนะ, การเปลี่ยนแปลงอย่างรุนแรงของเปลือกโลก
shaving X from Y - taking a small amount off of Y, decreasing Y by a small amount
infrastructure - the high-cost facilities that everyone in the economy shares (water, roads, electricity, trains) สาธารณูปโภค (See Google Definitions)
unprecedented - never having happened before ที่ไม่เคยเกิดขึ้นมาก่อน
projection - a calculation or guess about the future based on information that you have การคาดคะเน
cost projection - what experts think costs will be in the future (here: the money that must be spent to rebuild and recover from the Japan earthquake)
private insurers' cost - the money that insurance companies must pay (to company and people who bought insurance from them)
current - of the present time ปัจจุบัน
budget - the amounts of money that an organisation has available to spend on different things during a period งบประมาณ (See Wikipedia)
national budget - the money spent by the government of a country during a year
expected - believe will happen คาดว่า (จะเกิดขึ้น)
shoot up - increase very quickly
surge - a sudden increase in something การเพิ่มขึ้นอย่างรวดเร็ว
demand - the need and desire to buy goods and services by households and businesses
surge in demand - a sudden and quick increase in demand
crisis - an urgent, difficult or dangerous situation วิกฤต
significant - large enough to be important or have a big effect ที่สำคัญยิ่ง
impact - an effect or influence ผลกระทบ
domestic - within the country ภายในประเทศ
consumption - goods and services that households (families) buy การบริโภค (See Wikipedia)
temporary - for only a limited period of time, i.e., not permanent ชั่วคราว
assessment - checking and analyzing the details of something (evaluation) and then making a judgement การประเมิณสถานการณ์
power - energy in the form of electricity produced in large quantities and used to operate lights, machines, and heating
nuclear power plant - a special building and equipment for producing power from nuclear fuel
real - without inflation (reduced by inflation to make amounts comparible over time)
Gross Domestic Product (GDP) - the total value of all goods and services produced in a country in a year, except for income received from money invested in other countries
real GDP - the percentage amount that the economy is increasing over time (adjusting for inflation, because price increases for everyone mask the "real" economic expansion)
real gross domestic product growth - the percentage by which an economy is expanding or getting bigger over time
pick up - increase, go faster, go quicker
construction - the work of building or making something, especially buildings, bridges, etc. การก่อสร้าง
efforts - the work done towards achieving some goal ความพยายาม
kick in - begin, start to happen
trade - the buying and selling of goods การค้าขาย
international - ระหว่างประเทศ between countries
international trade - the buying and selling of goods between countries
denominated - valued in a currency
X denominated in Y - the value of good or asset X is given in currency Y
X represents Y% of Z - X is Y% of Z
debt - an amount of money that you owe หนี้
appreciation - when a country's currency becomes more valuable compared to the currencies of other countries (which makes goods exported from the country more expensive)
annual - happening once a year ประจำปี
assets - a thing of value that a person or a company owns, for example: stocks, bonds, real estate, loans to others, or money (See Economist glossary) สินทรัพย์
debt servicing - the amount of money that a borrower must pay to a lender during a period of time for the money they borrowed, includes paying back the money borrowed (principal) and the fee for borrowing the money (interest) (See Google Definitions)
yen-denominated assets - assets with their value given in Yen (so when the value of the Yen goes up and down, the value of these assets also goes go and down)
annual debt servicing on yen-dominated assets - the money that must be paid each year for Yen loans (Yen borrowed in the past)