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India and China will bolster Asia economy
Asia's economy will be resilient in the face of a US recession thanks to the regional locomotives of China and India, but the pace of currency appreciation will slow, Standard & Poor's said on Wednesday.
- Reuters
- Published: 21:44 April 30, 2008
Singapore: Asia's economy will be resilient in the face of a US recession thanks to the regional locomotives of China and India, but the pace of currency appreciation will slow, Standard & Poor's said on Wednesday.
Asia's exports would take a hit as the world's largest economy slips into a recession, reducing the amount of dollars entering these economies that would fuel rises in their currencies, said Subir Gokarn, Standard & Poor's chief Asia-Pacific economist.
Still, Asia-Pacific ex-Japan would still grow 8 percent or more in 2008 and 2009, he said.
S&P forecast the US economy would shrink 0.5 percent in the first quarter and 0.9 per cent in the second. The United States was due to report first-quarter GDP figures later yesterday.
"What we are arguing is that the Asian region has developed within itself very strong drivers for growth, which tends to offset the influence of the weakening US economy," Gokarn told reporters on a conference call.
Free trade pacts
Chinese and Indian demand for goods from the rest of Asia would offset some of the impact from weaker US demand. Intra-regional trade would also be boosted by a spate of free trade pacts that have been signed, he said.
He forecast China's economy was likely to grow between 9.5 per cent and 10 per cent in 2008, supported by solid consumption and investment, before slowing to a range of nine per cent to 9.5 per cent in 2009. China's economy grew 11.9 per cent in 2007.
He forecast India's economy will grow between 8.2 per cent and 8.7 per cent in 2008 and 7.9 per cent to 8.4 per cent in 2009, from growth of 9.4 per cent in 2007.
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