DP19445 The resurgence of inflation: Why was emerging Asia different?
The post pandemic years have brought inflation back to levels not seen for decades. While this surge has been a global phenomenon, the impact has not been uniformly felt across all regions. Notably, Asia, among the emerging and developing economies, has experienced a comparatively mild rise in inflation, with rates not significantly diverging from those seen in previous inflationary periods. This paper explores the factors that might explain the distinct behavior of Asia. We provide evidence that a combination of weaker post-pandemic recovery, a less aggressive traditional fiscal policy, a strong use of subsidies, minimal depreciation of exchange rates, and a history of lower and less volatile inflation account for this region differential’s response.
