Asia-Pacific economies vulnerable to another global financial crisis: S&P

A potential double-dip recession among developed economies could have tough knock-on effects for Asia-Pacific nations, according to a series of articles that Standard & Poor's Ratings Services published this week.

"While not our base-case scenario, the region could be in for a hard landing if the US and eurozone enter another recession," says Michael Petit, Standard & Poor's head of corporate and government ratings in the Asia-Pacific region. "However, China could maintain its record of high single-digit growth for several years if it steps up its reform programme."

In an article titled Efficiency Gains Could Keep China's Economy On Full Throttle, Standard & Poor's credit analyst Kim Eng Tan said the main risk to growth is that China doesn't address the obstacles to productivity, such as price controls and excess incentives for state-owned enterprises.

"If the central government makes little or no progress, due to strong resistance from interest groups, China's economic growth over the next five to 10 years could slip from the levels to which it has become accustomed," Tan said.

In a guest opinion article, titled The ASEAN-5 Economies Are Losing Steam, Crisil Ltd. argues that several factors that helped cushion Indonesia, Malaysia, the Philippines, and Vietnam during the crisis that began in 2008 are gradually losing effect.

"Policymakers are rapidly unwinding stimulus measures in the region as they choose fiscal austerity and inflation control over growth. This trend, together with the cumulative impact of monetary tightening that began in early 2010, is constraining economic expansion," said Mr. Dharmarkirti Joshi, chief economist of Crisil Ltd.