Asia-Pacific growth prospects improving, says S&P report

SINGAPORE - S&P Global Ratings expects modest upward revisions to GDP growth in its upcoming forecasting round. “Inflation should remain contained - if not too low - across most of the region, and we would not rule out some additional rate cuts, including in Australia, Korea, and Taiwan,” it says.

“Nominal trade growth should begin to normalise as the effects of the oil price plunge drop out of the data (and prices grind higher).”

Said Paul Gruenwald, S&P Global Ratings' Asia-Pacific chief economist: "Concerns around China's growth have lessened, but we are still worried about the economy's trajectory.

“Absent a rise in external demand or productivity, China’s growth target remains too high and credit growth too fast and unsustainable."A dose of restructuring for State-owned enterprises will help as will managing growth expectations downward."

Japan is looking better, the report notes. First-quarter growth came in at a respectable 1.9% (quarter on quarter, seasonally adjusted annual rate) led by consumption, although nominal growth was still weak.

Postponement of the second leg of the hike in consumption tax to October 2019 should give Bank of Japan governor, Haruhiko Kuroda, space to continue to reflate the economy, Gruenwald said.

India's GDP growth was a solid 7.9% on-year in the first quarter of 2016, although the large, positive "errors and omissions" cast a cloud over the number.
 "We continue to believe that the trajectory for growth in India remains upward," said Gruenwald. "Industrial output and credit growth both look weaker than we would like, although the latter may reflect ongoing reforms in the banking sector. Inflation looks steady and the Reserve Bank of India is on hold for now."  www.standardandpoors.com (ATI).