Asia-Pacific is facing the emerging risk that the widely expected boost to exports from the improving U.S. economy will fail to materialize and galvanize GDP growth, according to a report that Standard & Poor's published today titled "Does Higher U.S.
Consumer Spending Still Translate Into Higher Asian Growth’s"
The report says that the benefits of the rejuvenated consumer demand in the U.S. have so far been limited within its own borders. Emerging Asia's export numbers continue to disappoint two years into the recovery of the U.S. private sector.
"An emerging risk is that the traditional trade links that transmitted U.S. consumer demand to Emerging Asian growth may work at a longer lag. A graver risk is that the links are structurally weaker due to a permanent loss in the region's competitiveness," said Standard & Poor's economist Vince Conti.
"With Europe likely to be sluggish for years to come and China's growth moderating, a U.S. recovery that does not generate Asian exports would necessitate a major rethink of growth strategies within the region. And that could necessitate major structural reforms to raise productivity and alter the balance between domestic consumption and savings," said Conti.
On the other hand, if the trade-driven recovery is merely delayed by cyclical factors, then Asian firms and households might sit tight, and possibly receive some form of monetary or fiscal stimulus if the wait becomes too long.
The report says that among the possible factors contributing to the absence of an export recovery so far are high levels of inventory as well as a smaller wedge in unit labor costs between the U.S. and Emerging Asia.
Under Standard & Poor's policies, only a Rating Committee can determine a Credit Rating Action (including a Credit Rating change, affirmation or withdrawal, Rating Outlook change, or CreditWatch action). This commentary and its subject matter have not been the subject of Rating Committee action and should not be interpreted as a change to, or affirmation of, a Credit Rating or Rating Outlook.
Consumer Spending Still Translate Into Higher Asian Growth’s"
The report says that the benefits of the rejuvenated consumer demand in the U.S. have so far been limited within its own borders. Emerging Asia's export numbers continue to disappoint two years into the recovery of the U.S. private sector.
"An emerging risk is that the traditional trade links that transmitted U.S. consumer demand to Emerging Asian growth may work at a longer lag. A graver risk is that the links are structurally weaker due to a permanent loss in the region's competitiveness," said Standard & Poor's economist Vince Conti.
"With Europe likely to be sluggish for years to come and China's growth moderating, a U.S. recovery that does not generate Asian exports would necessitate a major rethink of growth strategies within the region. And that could necessitate major structural reforms to raise productivity and alter the balance between domestic consumption and savings," said Conti.
On the other hand, if the trade-driven recovery is merely delayed by cyclical factors, then Asian firms and households might sit tight, and possibly receive some form of monetary or fiscal stimulus if the wait becomes too long.
The report says that among the possible factors contributing to the absence of an export recovery so far are high levels of inventory as well as a smaller wedge in unit labor costs between the U.S. and Emerging Asia.
Under Standard & Poor's policies, only a Rating Committee can determine a Credit Rating Action (including a Credit Rating change, affirmation or withdrawal, Rating Outlook change, or CreditWatch action). This commentary and its subject matter have not been the subject of Rating Committee action and should not be interpreted as a change to, or affirmation of, a Credit Rating or Rating Outlook.
