Asia set for solid growth despite Japan quake, says S&P

AFP, Singapore: Asia is poised for another year of solid growth in 2011 even if the impact of the killer earthquake and tsunami on Japan remains unclear, Standard and Poor's said Wednesday.

'We expect the region to record another year of solid growth in 2011 after 2010 proved that Asia is emerging from the (global financial) crisis in a strong position, even as the economic picture for Japan following the recent earthquake remains less clear,' said Tom Schiller, a senior regional analyst.

'But growth presents a unique set of challenges for policy makers, officials, and investors across the Asia-Pacific region,' he said.

However, growth for the region with the exception of Australia and New Zealand is expected to moderate slightly from last year because of ongoing worries over the US and eurozone economies, Standard and Poor's said.

Inflationary pressure is a key concern for the region, which faces the prospect of tighter monetary policies as authorities seek to temper price rises, it said in its twice-yearly regional outlook.

'Rising prices stem in part from rapid growth and the easy credit conditions that the region's governments put in place to support their economies during the global financial crisis,' the credit ratings firm said.

'We expect the region's central banks to continue to tighten monetary policy this year,' it said, referring to raising interest rates to fight inflation.

In a separate report, Moody's Analytics said the global economy was not expected to be affected badly by the crisis in Japan.

'The world economy will feel the effects of Japan's disaster mainly through adjustments in financial markets, but the impact on global growth will be small,' said Moody's Analytics, a division of Moody's Corporation.

Japan accounts for around seven per cent of global output and 'a near-term contraction in the Japanese economy thus will subtract little from global GDP (gross domestic product) growth', it said.

The subsequent rebuilding of damaged infrastructure financed by emergency public spending will boost long-term growth, it added.

'The destruction wrought by the earthquake, tsunami, and subsequent nuclear plant explosions will depress household and business sentiment.

'Yet consumers will not hold back from reconstruction-related spending; this will add to economic activity later in the year,' it said.

In its report on Asian economies, Standard and Poor's said regional central banks may also consider further capital control measures and other actions to prevent risky assets bubbles.

China is projected to grow 9.1-9.6 per cent in 2011, lower than last year's 10.3 per cent and this is expected to weigh on the rest of the region, it said.

'Chinese authorities are adopting measures to rein in expansionary monetary policy to help combat rising inflation, escalating asset prices, and higher wage inflation,' it added.

'We expect these tightening measures are likely to prune money supply and credit growth in 2011.'

Japan, which is struggling to cope with the devastation wrought by a magnitude 9.0 earthquake and tsunami on Friday, that triggered a crisis at a nuclear power station, would grow 1.3-1.8 per cent, slower than last year's 4.0 per cent.

South Korea's economy is projected to grow 4.3-4.8 per cent from 6.1 per cent in 2010.

Within Southeast Asia, Singapore's growth is to moderate sharply to 4.5-5.0 per cent from 14.5 per cent last year, Malaysia is seen expanding 4.8-5.3 per cent and Indonesia to grow 5.9-6.4 per cent from 6.1 per cent.

The Philippines is forecast to grow 5.1-5.6 per cent from 7.3 per cent and Thailand's economy would ease to 4.0-4.5 per cent from 7.8 per cent.

 

Japan crisis could slow global nuclear development: IEA

AFP, Oslo: The disaster at Japan's Fukushima nuclear plant could slow worldwide development of nuclear technologies and further complicate the battle against climate change, the International Energy Agency said Tuesday.

'I recognise increased public fears currently surrounding the nuclear sector due to the events in Japan,' said agency chief Nobuo Tanaka, a Japanese citizen whose country is struggling to limit a nuclear disaster at its quake-and tsunami-hit atomic energy plants.

'While I understand the public reaction, I am concerned about the effect it could have on support for this technology, given its important role in achieving both energy security and a low-carbon economy,' he told reporters during a visit to Oslo.

According to an IEA report published last year, development of nuclear energy should account for six per cent of the plan to slash CO2 emissions in half by 2050, which is necessary to keep global temperatures from rising more than two degrees Celsius.

The accident at Japan's Fukushima plant has prompted a debate on nuclear energy in many countries and cast a shadow on the sector's renewal.

Germany announced Tuesday the temporary shutdown of its seven oldest nuclear reactors while it conducts a safety probe in light of Japan's atomic emergency.

Switzerland on Monday suspended plans to replace its ageing nuclear power plants, while in France — where nuclear makes up 75 per cent of electricity production — environmental groups have called for a referendum on the future use of nuclear power.

'I encourage patience until enough information is available for a full review of the problems at the Japanese facility so that we can learn lessons for the role of the nuclear power in the future,' Tanaka told a news conference.

'Certainly reviewing the risks may take some time. Building nuclear power or expanding nuclear power may mean more costs and more delays. The nuclear option may not play as big a role as we predicted,' he added.

In a report published Tuesday, it was estimated that Japanese oil consumption might increase by 200,000 barrels per day if the entire electricity output that usually comes from the country's 11 nuclear power plants was replaced by oil-fuelled production.

Tanaka noted his home country had large stockpiles of oil, equal to some 170 days of consumption.

He added that 'if necessary, we stand ready to use the strategic stockpiles.'

Founded in 1974 at the height of the oil crisis, the IEA requires its members, which include most of the world's industrialised nations, to stockpile oil corresponding to at least 90 days' worth of their net imports.