Standard & Poor?s (S&P) has said that India?s GDP is likely to grow at 6.5-7% in 2009 while inflation will plummet to 5.5%. For China, it predicted a growth rate of 7.8-8.3% next year.
In a report on ?Asia-Pacific Markets Outlook 2009?, S&P said globally, growth forecasts have worsened in the past few months and credit conditions remain tight.
?Against this backdrop, 2009 will be a challenging year for all economies, and those in Asia-Pacific will not be spared some degree of hardship. But good underlying growth fundamentals such as the dynamic economies of China and India, strong intra-regional trade agreements, and supportive governments mean that Asia-Pacific is relatively well-placed to navigate the global storm,? it said.
Subir Gokarn, chief economist at S&P, Asia-Pacific, observes that regional growth drivers such as strong domestic demand in China and India and supportive monetary policy stances of the region?s governments will enable most economies to experience positive, albeit slowing, growth in 2009.
Simply put, Asia-Pacific is expected to be able to roll with the punches?although some economies such as Japan and Singapore are likely to experience quarters of negative GDP growth.
?By the standards of 2006 and 2007, 2009 will not be an outstanding year by any means, but it will reflect the region?s resilience and collective ability to moderate fluctuations around a strong growth trend rate,? said Gokarn.
As a lagging symptom of slowing economic growth, S&P expects defaults of rated entities to increase in 2009 ? possibly climbing to double digits. ?We have already witnessed the region?s portfolio of ratings move from positive bias it enjoyed for the past three years to negative bias,? said regional chief credit officer, Ian Thompson.
?The number of credits on negative outlook or CreditWatch Negative represents around 19% versus 5% positive. This, along with an enlarged portfolio of credit in the lower bands of our rating scale, suggests further downgrades and likely defaults.?
For equity markets in the Asia-Pacific, a rebound is likely in 2009. Lorraine Tan, director of research, S&P?s equity research, believes markets are in the process of bottoming.
?Although economic and corporate sentiments are likely to remain negative, we see that markets will have retraced in line with, and in some cases exceeded, movements in previous bear markets in terms of both value and time frame,? said Tan.