Food, crude oil prices threat to 9 % growth target: Report

Consistently high inflation related to food and crude oil prices, and poor industrial growth threaten to derail the government?s growth target, according to a Deloitte Report named Asia Pacific Economic Outlook ? India, China, Indonesia and Singapore.

The central bank continues to reiterate its commitment to controlling inflation and will likely resort to interest rate hikes in the near term, said the report.

The recent union budget presented by the finance minister noted the urgency of removing supply-side bottlenecks in agriculture, and also improving the country?s infrastructure through the channeling of both domestic and international funds.

Over the next ten years, India and Japan are expected to eliminate tariffs on 90 and 95 percent of goods, respectively. If ratified by the Japanese government, bilateral trade between the two countries could rise to US $25 billion by 2014, said the report.

The report also talks about the economic outlook in China, Indonesia and Singapore:

CHINA: While inflation remains a big concern, there recently was a glimmer of hope for policymakers. China?s trade surplus is declining and may continue to do so.

A reduction in the trade surplus will probably lead to reduced upward pressure on the renminbi. It will also mean that the central bank will not have to raise interest rates as much. Longer term, the Chinese economy is projected to grow at a slower pace than previously considered.

INDONESIA: Resisting the trend anticipated in many countries, Indonesia will probably achieve slightly higher growth in 2011 compared to 2010.

While Indonesia faces steep challenges in the form of inflation and poor infrastructure, domestic consumption is expected to remain strong and investment is likely to pick up, bolstering the country?s growth prospects. Rising commodity prices also bode well for the country?s export sector.

SINGAPORE: While Singapore staged a spectacular comeback in 2010, the economy will probably expand at a more sustainable level in the near term. Tourism and tourism related industries will likely emerge as the drivers for growth.

A rebound in domestic demand helped support the country?s recovery, but inflation poses a major risk to the exuberance of the Singaporean consumer. A rapid rise in food and oil prices can potentially hurt consumer sentiment and dampen demand.