China to remain key growth engine for Asia Pacific: S&P

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The economic development in Asia Pacific will continue to benefit from the three significant subregional economies in 2007 -- China, India, and Japan. China, in particular, continues to be a key driver of regional growth, with the economic slowdown in the U.S. expected to dampen China's growth momentum only marginally. That is the conclusion of the 2007 Asia-Pacific Markets Outlook published today by Standard & Poor's, the leading provider of independent investment research, ratings and indices.
 
The report combines Standard & Poor's predictions for equity markets, credit quality and economic performance across the region next year, and includes the latest forecasts from Standard & Poor's Ratings Services and Standard & Poor's Equity Research. It says that Chinese real GDP growth in 2006 is likely to reach 10.5%, after hitting a high of 11.3% in the second quarter.  GDP growth in 2007 should hit close to 10%, due to factors including continuing macroeconomic stabilization measures, tightening fiscal stance, and an over-performed stock market in 2006.
 
"The theme of stability in 2007-2008 will be more crucial than ever in guiding policymaking," said Ping Chew, Managing Director of Corporate and Government Ratings, Asia. "The new set of party leaders will be installed in key government positions during the March 2008 National People's Congress. This will come just before the 2008 Summer Olympics in Beijing. Over this period, conservativeness and gradualism will be even more apparent in implementing key policy changes."
 
Overall credit metrics of the Chinese corporate sector is likely to remain sound, but the divergence in corporate sector credit quality and the higher proportion of sub-investment grade ratings is likely to bring a higher level of volatility to the rated corporate credit portfolio. 
 
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