asias-sovereigns-must-exercise-caution

Asia's sovereigns must exercise caution

Sovereigns have remained resilient during the financial crisis, but increasing risks are testing policymakers, says Standard and Poor's.

Rosie Slater

May 07, 2008

Despite benign conditions in Asia in the last two to three years, the flow-on effects of the housing and economic problems in the US are becoming more obvious, according to a report released by Standard and Poor's yesterday. These include reduced Asian exports a decline in capital flows the credit crunch and liquidity tightening volatile or weakening asset markets and lower corporate profits.

Moreover, structural capacity and seasonal supply issues in food, energy, infrastructure and labour, combined with continuing Asia domestic demand are ôbrewing into an explosive mix of inflationary pressuresö, continues the report. While governments attempt to balance the short-term growth targets against longer-term structural and inflationary challenges, the ratings agency questions the extent...

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