Another slowdown might hit Asia-Pacific harder: S&P

New Delhi, Aug 8 (PTI) Standard & Poor's, whose rating
downgrade of the US has created mayhem in markets worldwide,
on Monday warned that Asia-Pacific economies, including India,
might face a deeper and prolonged impact if the global economy
suffers a renewed slowdown.
Without specifically naming India, S&P said the
implications for sovereign creditworthiness in the
Asia-Pacific would likely be more negative than previously
experienced and a larger number of negative ratings actions
would follow.
Lowering of credit ratings generally make borrowings
costlier and difficult for the country or company being
downgraded.
"Fiscal capacities of Japan, India, Malaysia, Taiwan and
New Zealand have shrunk relative to pre-2008 level," it said,
adding that these countries continue to bear the scars of the
downturn.
The governments, it said, would be required to use their
own revenue streams to support their economies and financial
sector once again.
It further said that if a renewed slowdown comes, it
would create a deeper and more prolonged impact.
At the time of the global financial crisis in 2008,
several countries, including India, had rolled out stimulus
packages facilitating monetary expansion and lower taxes to
mitigate the impact of the slowdown.
At that time, India had provided three fiscal stimulus
packages totalling Rs 1.86 lakh crore, which helped the
economy clock a growth of 8 per cent in 2009-10, as against
6.8 per cent in 2008-09. Prior to the crisis, the Indian
economy had been expanding at a growth rate of over 9 per cent
over a three-year period.