SINGAPORE: Five years after the global financial crisis cut a swath through Asia-Pacific, the region may be down but it’s not out, Standard & Poor's Ratings Services says.
In its report, After The Financial Crisis, Is Asia-Pacific An Export-Lighter, Credit-Heavier Model?, S&P says the region's growth continues to be the highest in the world although export growth has waned.
"There was a wide variation in growth across the region, with China and India in front," said S&P's chief economist for Asia-Pacific, Paul Gruenwald.
"Although growth is slower than it was five years before the 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 financial crisis, and exhibited a steady downtrend following an impressive rebound.
"Export growth has averaged only 4% 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 US and Europe," Mr. Gruenwald said.
With the growth from exports dimming, Asia-Pacific looked within for growth opportunities. Bank credit surged in some economies, given loose monetary policy. Singapore, China, and Malaysia showed the biggest changes in bank credit to GDP by a wide margin.
In terms of the overall level of bank loans, Hong Kong led the region at 184% 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 outturn, and for the newly industrialised economies (Hong Kong, Singapore, South Korea, and Taiwan), following signs of an incipient export rebound.
“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. Our growth forecasts for the ASEAN-5 group (Indonesia, Malaysia, Philippines, Thailand, and Vietnam), which has seen the bulk of the recent market pressures, have also been marked down.
“We continue to see the balance of risks to Asian growth as being on the downside,” S&P concluded.