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Difficult times will test prudence of Asian sovereigns - S&P
uusjio | May 6, 2008 at 08:57 pmby
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The potential negative effects from U.S. housing and economic problems on Asia are becoming more obvious, the rating agency said in a report.
They include reduced Asian exports, decline in capital flows, credit crunch and liquidity tightening, volatile or weakening asset markets, and lower corporate profits.
Also, rapidly rising food prices are becoming a top concern for many governments, as further erosion of the affordability of staple foods, particularly in low per capita income economies, could lead to social tension and political instability.
In pursuit of quick fixes, some governments are introducing extensive and market-distorting food price controls and export rations. Rising oil prices are adding to the troubles, S&P was quoted by Thomson Financial as saying.
Indonesia is experiencing fiscal pressure due to rapidly rising fuel subsidies, while both Vietnam and Sri Lanka are going ...