Bangkok--6 Oct--Fitch Ratings
In a report published today, Fitch Ratings says that Asia-Pacific corporates are likely to emerge from the global recession with more resilience and lower vulnerability to negative rating actions than their global peers, leading to a more rapid and robust recovery for the region's corporates than that expected for their US and European counterparts.
"Looking ahead to 2012, in Fitch's view, the large emerging economies of Asia - namely China and India - will remain the world's growth engine, contributing an increasingly large share of GDP growth to the global economy," said Tony Stringer, Managing Director and Head of Fitch's Asia-Pacific Corporates Team. "While the major Asian economies have been impacted by the global slowdown as a consequence of their export-dependent models, Fitch nonetheless expects Asian corporates to enjoy more positive growth dynamics than their western peers as they emerge from recession," added Mr. Stringer.
Key reasons for this expectation include generally manageable debt levels among Asian companies, an increasing ability to compete with established international players in global markets and banking systems that are likely to prove resilient in their ability to continue financing the corporate universe, reflecting fewer legacy issues - in terms of toxic assets and aggressive lending - than their western counterparts. However, a number of risk factors to this benign scenario exist, with the threat of a global double-dip recession - although not Fitch's central case expectation - having the potential to derail Asia's recovery, particularly if western consumers are unable to support Asian export flows as a consequence of their need to reduce debt.
The report notes that one of the key medium-term challenges for Asian economies will be to increase the level of domestic consumption and reduce their reliance on exports and capacity investment to generate growth. Fitch expects only limited progress to be made in this direction by 2012, with the absence of effective social safety nets, particularly in China, perpetuating high savings rates, further investment in manufacturing capacity and continuing export dependency, likely to be reinforced by managed exchange rates.
The special report "Asia-Pacific Corporates in 2012" is available on the agency's website, www.fitchratings.com.
Contacts: Tony Stringer, Hong Kong, Tel: +852 2263 9559.
Media Relations: Karen Cho, Hong Kong, Tel: +852 2263 9935, Email: [email protected]; Shivani Sundralingam, Singapore, Tel: + 65 6796 7215, Email: [email protected].