Testing times: Hard landing looms for Asia Pac economies

"While not our base-case scenario, the region could be in for a hard landing if the U.S. and eurozone enter another recession," says Michael Petit, Standard & Poor's Head of Corporate and Government Ratings--Asia-Pacific. "However, China could maintain its record of high single-digit growth for several years if it steps up its reform program."

In an article titled "Efficiency Gains Could Keep China's Economy On Full Throttle," Standard & Poor's credit analyst Mr. Kim Eng Tan said the main risk to growth is that China doesn't address the obstacles to productivity, such as price controls and excess incentives for state-owned enterprises.

"If the central government makes little or no progress, due to strong resistance from interest groups, China's economic growth over the next five to 10 years could slip from the levels to which it has become accustomed," Mr. Tan said.

In a guest opinion article, titled "The ASEAN-5 Economies Are Losing Steam," Crisil Ltd. argues that several factors that helped cushion Indonesia, Malaysia, the Philippines, and Vietnam during the crisis that began in 2008 are gradually losing effect.

"Policymakers are rapidly unwinding stimulus measures in the region as they choose fiscal austerity and inflation control over growth. This trend, together with the cumulative impact of monetary tightening that began in early 2010, is constraining economic expansion," said Mr. Dharmarkirti Joshi, chief economist of Crisil Ltd.

The article suggests that slowing growth is inevitable for the ASEAN-5 during 2011 and 2012. Exports are likely to falter, given the anemic growth prospects for the developed economies.

Standard & Poor's has lowered India's GDP growth outlook for 2011 to 7.5%-8% from the 8%-8.5% it had projected in March. A guest opinion article, titled "India Economic Outlook 2011: Rising Interest Rates And A Shaky Global Economy Take Some Of The Sheen Off Growth," states that a slowdown in developed economies, rising domestic interest rates, and inflation are dampening India's growth prospects.