Asia more vulnerable to EU, US: poll. Optimism around Asia is fading with growth in its biggest economies slowing considerably this year, compelling central banks to keep policy accommodative for longer, though the worst of the downturn may be over, a Reuters poll showed yesterday.
As Europe’s debt crisis drags on and the US economy slows, weighing on Asia’s exports, economists are cutting their growth forecasts for most of the economies in the region. However, they remain cautiously optimistic that Asia would start to recover by the end of this year, even if some are skeptical about the pace at which it would do so.
“It is going to be a long hard slog back up,” said Vishnu Varathan, economist at Mizuho Corporate Bank in Singapore, who feels that this time around Asia is not going to see the V-shaped rebound it experienced after the 2008 to 2009 global crisis. When compared to previous Reuters quarterly surveys, analysts seem more pessimistic about Asia’s ability to shield itself from the headwinds from the Europe and the US. "Asia Exposed" by Stephen S. Roach. Exit from comment view mode.
Click to hide this space NEW HAVEN – Asian authorities were understandably smug in the aftermath of the financial crisis of 2008-2009. Growth in the region slowed sharply, as might be expected of export-led economies confronted with the sharpest collapse in global trade since the 1930’s. But, with the notable exception of Japan, which suffered its deepest recession of the modern era, Asia came through an extraordinarily tough period in excellent shape. That was then. Financial and trade linkages make Asia highly vulnerable to Europe’s malaise. Indeed, the Asian Development Bank estimates that European banks fund about 9% of total domestic credit in developing Asia – three times the share of financing provided by banks based in the United States. The transmission effects through trade linkages are just as worrying. That seemed like a good move. The bad news is that Asia seems to be learning little from repeated external demand shocks.
The international financial crisis: timeline, impact and policy responses in Asia and the Pacific. Financial_crisis_policy_challenges_asia_pacific. Pap52c. Asian markets join global rally after ECB debt plan. 7 September 2012Last updated at 02:12 ET Continue reading the main story Asian stock markets have risen, joining a global rally, after the European Central Bank (ECB) unveiled a plan targeted at easing the region's debt crisis.
The ECB said it would buy bonds of the bloc's debt-ridden nations in a bid to bring down their borrowing costs. The implied borrowing costs for Spain and Italy fell after the announcement. Japan's Nikkei 225 index rose 2.2%, Korea's Kospi gained 2.6% and Hong Kong's Hang Seng added 3.1%. "We think this is a credible plan to addressing the issue, and while there are still political hurdles, we expect those will be addressed," said Alec Young, global equity strategist at S&P Equity Research. 'Ready to act' Continue reading the main story “Start Quote The markets were looking for a strong decisive action and a commitment from the central bank that they are ready to act if any issues blow up in the region's bigger economies” End QuoteJustin HarperIG Markets 'Risk appetite'