Saturday, May 16, 2009
Although financial markets appear to be coming out of a deep freeze, it remains early to say the global slowdown has bottomed, said Standard & Poor's Ratings Services in a report.
The report, titled "Fiscal Health Of Asian Sovereigns If 'Green Shoots' Wither," is a "what-if" scenario analysis, looking at potential evolutions of selected Asian sovereign fiscal performance over the next few years in two scenarios.
One scenario is Standard & Poor's baseline projections of economic development, in which Asian economies recover sometime in 2010 after steep declines in many of them.
"In this scenario, the negative impact on sovereign credit ratings would be minimal, with the possible exceptions of those currently with a negative outlook-- Thailand, Vietnam, and India," said Standard & Poor's credit analyst Kim Eng Tan.
The other scenario is an extended recession, in which most of Asia drags through four consecutive years of contraction. Even in this scenario, which we consider to be remote, our simulation indicates that fiscal pressures are not likely to lead to default although sovereign credit quality in many cases would deteriorate markedly, Tan said.
The results suggest that, unless an investment-grade sovereign makes major policy mistakes, most would remain in that category after an extended-recession scenario, even though their credit ratings could slip by one to four notches.
The resilience of these investment-grade sovereigns, with a few exceptions, stems from their relatively strong fiscal positions prior to the crisis.
"These governments have years of fiscal consolidation and debt reduction, a sounder banking sector with higher capitalization and better risk management, and stronger external liquidity enhanced by more flexible exchange rate regimes," Tan said.
This report is part of a global effort to provide greater trans
India's industrial production contracted the most in well over a decade in March due to a sharp drop in the manufacturing output, even as electricity and mining components reported growth, government data showed. Industrial output shrank 2.3% in March as against a growth of 5.5% in the same month last year, beating average expectation of a 0.5-0.7% fall, the Central Statistical Organisation (CSO) said. This is the worst performance for the IIP since January 1993. February's figure was revised to a 0.7% drop from a preliminary estimate of a 1.2% decline.
Within the Index of Industrial Production (IIP), the manufacturing segment shrank by 3.3% (5.7%), while mining rose by a modest 0.4% (4.9%) and electricity output climbed by a decent 6.3% (3.7%), the CSO data revealed. For the year ended March 31, 2009 industrial production was up by just 2.4% as against 8.5% in the previous financial year. The cumulative growth in the three sub-segments has been pegged at 2.3%, 2.3% and 2.8% respectively during April-March 2008-09 over the year-ago period.
As many as 5 out of the 17 industry groups showed positive growth during the month compared to the corresponding month of the previous year. The industry group ‘Beverages, Tobacco & Related Products’ showed the highest growth of 15.1%, followed by 8.3% in ‘Basic Chemicals & Chemical Products’ and 7.0% in ‘Transport Equipment & Parts’. On the other hand, the industry group ‘Food Products’ showed a negative growth of 35.8% followed by 25.1% in ‘Wood & Wood Products' and 19.7% in ‘Other Manufacturing Industries’.
The sectoral growth rates in Basic Goods, Capital Goods and Intermediate Goods during the month stood at 1.4%, (-) 8.2% and (-) 4.4%, respectively. Consumer Durables and Consumer Non-durables recorded growth of 8.3% and (-) 3.6% respectively, with the overall growth in Consumer Goods being (-) 0.8%.