No immediate impact of US downgarde on Asia Pacific, says S&P
08 Aug 2011
There is no immediate impact on Asia-Pacific sovereign ratings resulting from the lowering of the issuer credit ratings on the U.S. to 'AA+' on Friday August 5.
Standard & Poor's Ratings Services today said, "However, the US rating change, together with the weakening sovereign creditworthiness in Europe, does point to an increasingly uncertain and challenging environment ahead.
"Uncertainties in the global financial market and weakened prospects in the developed economies have further undermined confidence. The potential longer-term consequences of a weaker financing environment, slower growth, and higher risk aversion are negative factors for Asia-Pacific sovereign ratings.
For the moment, the generally stable outlooks for Asia Pacific sovereigns (with the exception of New Zealand, Japan, Vietnam, and the Cook Islands) is supported by sound domestic demand, relatively healthy corporate / household sectors, plentiful external liquidity, and high domestic savings rates. Our baseline assumption of no likely abrupt dislocations in developed economies' financial and real economies underpins this opinion.
However, given the interconnectivity of the global markets, an unexpectedly sharp disruption in developed global financial markets could change the picture, and could lead the US and European economies into deep contractions again, or further delay their recoveries.
In this scenario, the experience of the global financial crisis of 2008-2009 shows that export-dependent economies with large exposures to the US and / or Europe would feel the most pronounced economic impacts. It's not likely things would be very different this time.
