Economy to slow in Asia amid high rates, fuel hike
Economy to slow in Asia amid high rates, fuel hike
Agence France-Presse, Kuala Lumpur
Asia's economic prospects for 2006 remain upbeat with
recovering exports supporting regional growth but rising interest
rates and fuel prices will cap growth, Fitch Ratings said on
Thursday.
"Leading indicators imply Asian export growth will continue to
recover in the first half of next year, particularly in light of
new orders in U.S. manufacturing," said James McCormack, head of
Asia sovereign ratings at Fitch.
But McCormack said Fitch forecasts a slight decline in the
pace of regional gross domestic product (GDP) growth next year.
"China's growth is expected to dip below nine percent and
higher interest rates in the U.S. should begin to dampen demand
for Asian exports in the later part of the year," he said in a
statement.
The Chinese economy grew 9.6 percent last year.
McCormack, who is based in Hong Kong, said excluding Asian
economic power houses -- China and Japan -- Fitch forecasts Asian
growth would decline to 4.5 percent in 2006, down from 4.7
percent this year.
"Given the possibility of even higher global interest rates
and further spikes in oil prices, risk to regional growth are
weighed disproportionately to the downside," he said.
McCormack said with exception, Malaysia, a net oil exporter,
would continue to enjoy an expansion in the economy even with
higher interest rates.
David Marshall, head of Asia-Pacific financial institutions
said with the slightly slower GDP pace of growth Fitch expects
Asian banks to operate in a "reasonable stable operating
environment next year."
"Within Asia, only the Philippines is still grappling with
unresolved economic and financial sector issues, with Japan and
Korean banks performing well," he said.
Fitch said in the rest of Asia, the rating firm sees a mostly
stable picture for bank credit quality.
Some banks in Indonesia have been impacted by asset quality
concerns, notably Bank Mandiri, but Fitch sees these problems as
limited and the overall banking sector to be in adequate
financial condition, it said.