THE ASIAN ECONOMIES IN 2012

ASIA-PACIFIC MARKETS POISED FOR GROWTH IN 2012: REPORT

A Moody Analytics report looks at how the global slowdown will impact the Asian economies.

The Economic Times, January 2, 2012

Asian economies enter 2012 in the middle of a global economic slowdown due to tighter domestic monetary conditions and weaker export demand from Europe and the US. However, according to Moody Analytics, Asia-Pacific economies will grow in 2012, especially in the second half. This is because the region's fundamentals are sound and its policymakers have ample ammunition to support growth.

The major driver of the growth in Asia is China, as it is the number one export destination for regional countries. Though recent Chinese data confirm that the economy is slowing, it is a government engineered one. The stiff monetary conditions, fiscal tightening and property restrictions are slowing the economy at a manageable rate. Moody Analytics expects the country's GDP growth at 8.7% in 2012 driven by public infrastructure spending and firm domestic demand.

However, Asia's small export-led economies remain vulnerable. Taiwan, Singapore and Hong Kong are among the most trade-exposed and will tip back into recession if the global economy slows significantly in 2012. South Korea is in the unique position of producing what fast-growing emerging markets want and at a price point they can afford. For Thailand, the fourth quarter floods knocked out autos and electronics production, which could have an impact on the Japanese economy. This is because many flood-affected firms are suppliers for Japanese industry.

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