ASEAN KEY DESTINATIONS
Asia Pacific economies set to go slow - economist
Growth in the Asia Pacific is set to slow with the next 12 months being some of the toughest in years, with growth coming in at a five- or 10-year low, Malaysian government news agency Bernama quoted an economist as predicting.
Countries in the region which have come to rely on China to propel their economies will also see a decline in their growth rates, said Daniel Melser, senior economist at the Moody's Economy.com office in Sydney.
In his report entitled "Asia-Pacific Outlook: An Indirect Hit from Credit Crisis", Melser said China will post growth of around nine percent over the next few years compared with 11.9 percent in 2007.
On the bright side, Asia-Pacific countries are likely to fare better than the United States or Europe, where the odds of a deep downturn, perhaps the worst in 10 or 20 years, are shortening every day, he said.
The Asia Pacific has escaped relatively unscathed from the financial effects of the credit crisis, but the region will not remain immune from its economic crisis, Melser said.
Along with equity markets in the rest of the world, the regional share markets and currencies have taken a pounding in recent weeks, he said.
"The decline does not reflect financial woes -- the region has suffered only modest write-downs of assets -- as much as expectations of a weaker global economy," he added.
According to Melser, the greatest risk to Asia is not a financial crisis but an economic slowdown, considering that exports are such a major contributor to regional output.
"The absence of sizeable write-downs meant that the region's financial institutions have not come under the same pressure as those in much of the rest of the world. Asia has yet to see a bank failure, or a bailout, related to the US credit crisis," he said.
But it has not been all plain sailing, Melser said.
Despite robust balance sheets, financial institutions in some economies have struggled in the face of a global liquidity shortage, he said.
"This has placed some pressure on those seeking fresh funds or wishing to roll over existing funding. However, these liqudity problems have proved manageable," he added.
Melser said reduced liquidity has created difficulties in some parts of the Asia-Pacific, though these have been modest given that most countries run current account surpluses, with the notable exceptions being Australia, New Zealand and India.
"Those countries with surpluses -- which export rather than import savings -- have been relatively insulated from developments in global financial markets, as overseas borrowings has been minimal," he said.