Asia better placed than developed economies: Morgan Stanley

NEW YORK (Bloomberg): Asian economies are in a better position than their developed-world counterparts to absorb shocks from a banking crisis that has roiled global financial markets, according to analysts at Morgan Stanley.

"We saw a number of factors which would keep Asia’s domestic demand robust, hence helping in its growth outperformance,” analysts led by Chetan Ahya wrote in a research note. They highlighted strong liquidity coverage ratios at Asian banks and "relatively stable” debt-to-GDP ratios.

On top of that, monetary policy is not as restrictive yet as it is in the US, they said. As a result, "the downside risk to Asia’s growth will be more muted.”

Morgan Stanley does expect some tightening in lending standards to occur in Asia in response to US bank stress, though "the magnitude and persistence are likely to be less intense than what is likely to transpire in the US.”

Whether Asia’s growth can outperform the developed world will depend on how the US economy evolves, they said, laying out two potential scenarios:

Policymakers are racing to ease growth strains and a loss of confidence in the global financial system after the collapse of Silicon Valley Bank and as UBS Group AG agreed to buy Credit Suisse Group AG in a government-brokered deal.

Over the weekend, the Federal Reserve and five other central banks announced coordinated action to boost liquidity in US dollar swap arrangements.

Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

Next In Aseanplus News

Asean News Headlines at 9pm on Monday (May 29, 2023)
Japan PM's son to step down as executive secretary amid public criticism
Indonesia central bank targets 30% increase in repo deals this year
Prolonged, intense heat expected from June to October, raising risk of haze, fires in south Asean
Fahmi expresses commitment to uplifting dignity of media practitioners
Anwar reiterates commitment to welfare of Armed Forces personnel
South Korean province keen to establish trade ties with Sabah
Indonesia scraps ban on sea sand exports and it is a big boon for Singapore
For this nifty, fat Shifty anything is paw-sible - even a fall six-storey high in Thailand
Singapore President Halimah Yacob says she will not run for second term in upcoming election

Others Also Read