Asia’s trade recession over, but curb enthusiasm, says ANZ

SINGAPORE – ANZ Bank believes that Asia’s two year trade recession is finally behind us, but says the building blocks for a full-bodied recovery that encompasses all dimensions of growth, including consumption and investment, are yet to fall in place.

“The region has to overcome a complicated legacy of excess capacity, poor profitability, and high leverage to ensure a full-bodied recovery,” ANZ says.
“This, in turn, requires a deeper and durable global trade cycle, wage restraint, and concentrated efforts to reduce debt burdens.
“Indeed, owing to these legacy complications, we are not forecasting a major acceleration in growth this year. More importantly, this validates our long-  standing view that Asian central banks will, by and large, not respond to tightening by the US Federal Reserve.
“There are of course, differences at the country level.

“In our view, headwinds are the mildest in Taiwan. Indonesia and the Philippines are also better positioned. At the other end of the spectrum is South Korea, suffering from sub-optimal capacity utilisation, weak profitability and higher leverage.”  www.live.anz.com (ATI).