Asia-Pacific exporters to be hardest hit by US financial turmoil: UN
Asia-Pacific economies are entering a phase of "heightened uncertainty" with export-led countries to be hardest hit by the ongoing financial turmoil in the United States, a United Nations report said Thursday.
By Agencies |
GENEVA: Asia-Pacific economies are entering a phase of "heightened uncertainty" with export-led countries to be hardest hit by the ongoing financial turmoil in the United States, a United Nations report said Thursday.
"In the worst case scenario of a recession in the US and a deeper depreciation of the dollar, the impact in much of the region would be harsh.
"Most vulnerable will be the exporters of high-technology products, such as electronics, to the US: Singapore, South Korea and Taiwan," said the report outlining the economic and social situation for the region for 2008.
Exporters would face a double whammy of a weakening dollar due to sharply lowered interest rates in the US, as well as slowing demand.
But even with the credit crunch casting a pall over export-led economies in the region, the financial turmoil is also throwing up opportunities, the report said.
"Interest in Asia-Pacific assets may increase because of the strong growth projections for the region," said the report by the UN Economic and Social Commission for Asia and the Pacific.
In addition, sovereign wealth funds in the region are increasingly being tapped to help bolster weakened banks in the US and Europe.
"That shifting balance of financial power is also evident in the dramatic rise in the overseas investment of Asia-Pacific corporations," it noted.
It also pointed out that the region's corporations, being "cash rich and not highly leveraged" have been largely resilient to the US credit crunch.
Meanwhile, the economic locomotives of China and India are expected to boost the resilience of the region, with their economies to continue chugging along, offering opportunities to other export-led economies.
India is expected to maintain growth at 9.0 percent in 2008 while in China, government spending increases will spur domestic demand.
Overall, developing economies in the region are projected to grow 7.7 percent in 2008, while its developed countries are projected to expand at 1.6 percent, slowing from 2.0 percent last year.
"In the worst case scenario of a recession in the US and a deeper depreciation of the dollar, the impact in much of the region would be harsh.
"Most vulnerable will be the exporters of high-technology products, such as electronics, to the US: Singapore, South Korea and Taiwan," said the report outlining the economic and social situation for the region for 2008.
Exporters would face a double whammy of a weakening dollar due to sharply lowered interest rates in the US, as well as slowing demand.
But even with the credit crunch casting a pall over export-led economies in the region, the financial turmoil is also throwing up opportunities, the report said.
"Interest in Asia-Pacific assets may increase because of the strong growth projections for the region," said the report by the UN Economic and Social Commission for Asia and the Pacific.
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In addition, sovereign wealth funds in the region are increasingly being tapped to help bolster weakened banks in the US and Europe.
"That shifting balance of financial power is also evident in the dramatic rise in the overseas investment of Asia-Pacific corporations," it noted.
It also pointed out that the region's corporations, being "cash rich and not highly leveraged" have been largely resilient to the US credit crunch.
Meanwhile, the economic locomotives of China and India are expected to boost the resilience of the region, with their economies to continue chugging along, offering opportunities to other export-led economies.
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India is expected to maintain growth at 9.0 percent in 2008 while in China, government spending increases will spur domestic demand.
Overall, developing economies in the region are projected to grow 7.7 percent in 2008, while its developed countries are projected to expand at 1.6 percent, slowing from 2.0 percent last year.
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