S&P Global Ratings expects 5.1 per cent growth in Asia Pacific (Apac) this year, excluding China and Japan, thanks to the recovery in external trade and easing inflation momentum. — AFP photo
KUALA LUMPUR (March 26): International credit rating agency S&P Global Ratings expects 5.1 per cent growth in Asia Pacific (Apac) this year, excluding China and Japan, thanks to the recovery in external trade and easing inflation momentum.
It said export demand should slightly improve in 2024 with electronics leading the pick-up, while restrictive interest rates would continue to weigh on growth.
“Given the moderate sequential export volume growth in early 2024 and our expectation of modest global demand prospects, we don’t anticipate a vigorous export recovery,” it said in a report on the economic outlook for Apac for the second quarter.
Among developed economies, S&P forecast growth to pick up in trade-dependent developed ones such as South Korea, Taiwan, and Singapore; and fall in relatively domestic demand-led ones such as Japan and Australia.
Asian emerging market (EM) economies generally project robust growth, with India, Indonesia, the Philippines, and Vietnam in the lead.
However, S&P has revised downward the GDP outlook on several economies, including Singapore by 0.4 per cent to 2.2 per cent, Thailand by 0.3 per cent to 3.9 per cent, and Malaysia and Vietnam by 0.2 per cent each to 4.3 per cent and 6.1 per cent, respectively.
Hong Kong and Japan were revised down by 0.1 per cent each to 2.5 per cent and 0.8 per cent, respectively.
As for currency, S&P expects Apac currencies to appreciate modestly this year.
It said growth in the region is solid while in the United States, growth is likely to slow and interest rates decline.
“In early 2024, most Asia-Pacific economies saw their currency depreciate further against the US dollar by up to 5.0 per cent (in the case of Japan), largely as market expectations for US interest rate cuts were pushed out in time.
“The exceptions were India and the Philippines. They did not lose ground, in part because they have positive policy rate differentials with the US,” it added.
S&P noted that key growth risks for this year include a sharper-than-expected slowdown in the US, weaker growth in China, and a pronounced slowdown in domestic consumption. – Bernama