To reduce the vulnerability of local bond markets, however, it is crucial to improve transparency of the markets and foster domestic institutional investors. In addition, it makes sense for Asian economies to actively utilize their own savings for domestic productive purposes, provided that many of them enjoy surpluses in current account balances.
One recent study estimates that a 10 percentage point increase in inflation reduces the growth rate of real per capita GDP by between 0.2 and 0.3 percentage points per annum, leading to GDP being some 4 to 7 2 per cent lower than otherwise after 30 years.