Amidst the concern of a global slowdown, a report from Moody's Investors Service is likely to bring some relief, especially for economies in the Asia Pacific region. As per the report, despite the global headwinds during 2013 and quantitative easing measures taken by US, the sovereign credit fundamentals in the Asia-Pacific region are likely to remain robust.
The report estimates a flat growth at 5% for the region. However, relatively, it will be much faster than the growth in any other region. Even for China, despite moderation, the growth is projected to remain strong. Moody's confidence stems from robust and well functioning banking systems in the Asia Pacific region. Apart from that, the region fares well on some basic financial health indicators like capital adequacy, liquidity, and asset quality. With these attributes, the region should be able to survive the negative surprises from the global economy. Also, the individual economies should grow without subjecting themselves to sovereign risks.
However, economic fundamentals is just one variable to decide a nation's growth in the long run. For any region to survive financial spill over and attain non inflationary and stable growth, policies will play a key role. Barring Japan which is likely to face long term challenges, Moody's expects some pro growth policies in big three East Asian economies triggered by the change in leadership.
However, there are a lot of issues and events that will decide the eventual outcome. These will include elections, outlook for reforms, and management of geopolitical tensions over maritime territorial disputes and so on. Nonetheless, the picture looks much brighter when compared to Western economies. Hence, one should not be surprised if leading economies continue to attract investors' interest in 2013.
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