Asia-Pacific tops world growth despite waning export: S&P
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The Asia-Pacific region may register a slowdown but will still show the highest growth rate in the world, according to a recent report by Standard & Poor's Ratings Services.
S&P has marked down growth forecasts for the Asean-5 group (Indonesia, Malaysia, the Philippines, Thailand and Vietnam), which has seen the bulk of the recent market pressures.
The report “After the Financial Crisis, Is Asia-Pacific an Export-Lighter, Credit-Heavier Model?” said the region’s growth continued to be the highest in the world although export growth had waned.
“There was a wide variation in growth across the region, with China and India in front,” said the agency’s chief economist for Asia and the Pacific, Paul Gruenwald. “Although growth is slower than it was five years before the [2008] global financial crisis, Asia-Pacific economies generally have continued to expand at a respectable rate.”
The region’s export growth has swung wildly after the US-initiated financial crisis, and exhibited a steady downtrend after an impressive rebound. S&P continues to see the balance of risks to Asian growth as being on the downside, according to the report.
“Export growth has averaged only 4 per cent over the past 12 months. The growth of intra-Asian shipments has held up well in recent years, but this is too small to offset the very weak growth from the United States and Europe,” Gruenwald said.
With the growth from exports tapering, the Asia-Pacific region looked within for growth opportunities while bank credit surged in some economies, given loose monetary policy. Singapore, mainland China and Malaysia showed the biggest changes in the ratio of bank credit to gross domestic product by a wide margin. In terms of the overall level of bank loans, Hong Kong led the region at 184 per cent of GDP.
“Our China growth forecast remains unchanged, but we recently raised our numbers for Japan, based on a stronger-than-expected revised second-quarter figures, and for the newly industrialised economies (Hong Kong, Singapore, South Korea and Taiwan) following signs of an incipient export rebound,” the report said.
“In contrast, we have lowered our forecasts for India after capital outflows led to the rupee weakening and dealt a blow to confidence and investment.”
