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Asia-Pacific vulnerable due to EU export dependency

Publication Date : 03-05-2012

 

International rating agency Standard & Poor's yesterday said  the Asia-Pacific region is vulnerable to any flare-up in the European debt crisis due to its strong export dependency.

"If debt woes in the European Economic and Monetary Union (EMU or eurozone) lead to a more severe global slowdown than our base scenario, then we would consider taking negative rating actions on the banking sectors of affected Asia-Pacific countries," said a statement released in Tokyo.

The agency said most rated banks in the region could withstand pressures from the crisis at current rating levels, given their solid financial profiles and good liquidity.

"However, although risks have diminished across the eurozone, they have not disappeared," it warned.

Standard & Poor's base case scenario as of early April forecasts a mild recession in the eurozone, with a 40 per cent risk of a more severe outcome.

"Banks in the eurozone will continue to suffer from fundamental risks despite the recent easing of liquidity conditions underpinned by European Central Bank (ECB) operations," the statement said.

 

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