Asia-Pacific economies can expect solid growth: S&P
The overall Asia-Pacific economy is on track for steady growth over the next two years, but the benefits to the region of a recovery in the United States may be muted, according Standard & Poor's Ratings Services.
In a new report titled “Asia-Pacific Growth Is Still Solid, but Will the Effects of the US Recovery Be Overshadowed?”, S&P anticipates that gross domestic product for the region will expand by 5.3 per cent this year and 5.4 per cent in 2015 and 2016. Growth in emerging Asia will be about 1 percentage point faster.
“We have nudged up our [growth] forecast for China to 7.4 per cent this year, and believe it will continue to lead Asia-Pacific growth. Our revision reflects the stronger-than-expected performance in the second quarter, as well as the central government’s policy actions and statements suggesting that this year’s growth targets are more likely to be met,” said S&P’s chief economist for Asia-Pacific, Paul Gruenwald.
“We have also marked down Japan’s growth this year due to a much weaker-than-expected second quarter following the implementation of a consumption-tax hike on April 1.”
The report says signs of recovery in the US should be a welcome development for the Asia-Pacific region’s economic prospects, but the outlook is not unambiguously positive.
“While our risk profile has not changed materially since our last quarterly report, we would note that China began a property slowdown around midyear. How this plays out, including the response of the authorities, is top of our ‘what to watch’ list,” Gruenwald said.
“We are also watching the region position itself for rising interest rates starting next year, which could crimp growth expectations and credit quality should the increases happen faster than expected. Downside risks to Japan’s growth have re-emerged, too, following a sharp drop in activity in the wake of the consumption-tax hike. And geopolitical risks have reared their head again,” he said.
