Slowdown but no Asian financial crisis, say experts
Fears of a crash are exaggerated, they say
Despite some slowdown, odds of a widespread financial crisis are low.
The economic picture in many Asian markets may not be looking all that bright right now but suggestions that we are heading for a repeat of the 1997 Asian financial crisis are grossly exaggerated.
It is true some countries are having problems, says Selena Ling, head of treasury research and strategy with Singapore's OCBC Bank, but she does not think we are heading toward another Asian meltdown.
"I think calling a currency and economic crisis at this juncture is missing the point somewhat, even though risks persist," she says.
She says Asian economies, despite some problems, are on a much firmer economic footing than they were in 1997.
Paul Gruenwald, Standard & Poor's Asia-Pacific chief economist, agrees. He said in a statement: "The road may be rocky in the near term, particularly for the largest deficit countries such as India and Indonesia, but we don't think this is the Asian crisis all over again."
Analysts say much of the market turbulence that has taken place on Asian and emerging markets in recent months is being driven primarily by hints that the US Federal Reserve could start winding back its massive US$85 billion in monthly bond purchases as early as this month.
Coupled with this, there have been a number of recent cuts in Asian growth forecasts, including China.
In July, the Asian Development Bank lowered its growth forecasts for developing Asia for 2013 and 2014, citing a softer outlook for China, the world's second-biggest economy.
The Manila-based bank lowered its growth forecast for developing Asia by 0.3 percentage points to 6.3 per cent in 2013 and 6.4 per cent in 2014.
It cut its growth estimate for China by 0.5 percentage points to 7.7 per cent and 7.5 per cent this year and the next. Although below 8 per cent, this is still a respectable growth number.
"The financial markets appear to be in the midst of pricing in a different path for US monetary policy," said Standard & Poor's Gruenwald.
"During that process, we are likely to see bouts of volatility in emerging Asian economies, along with weaker currencies, lower asset prices and subdued sentiment and growth. But, in our view, this is not a repeat of the 1997 Asian financial crisis.
But UK Pakistani Christian group condemns Thai government's treatment of asylum seekers
Diocese will serve thousands of Kerala Catholics who migrated from southern India
Critics say the government is being hypocritical about Islamic militancy because they're actively wooing local radicals
Irom Sharmila to contest Indian state polls, archbishop backs fight against act that grants military impunity for its actions
Move 'paves way for greater transparency' in Philippine government, sparks renewed calls for passage of law in congress