KUALA LUMPUR: The growth outlook for Asia Pacific remains challenging says Fitch Ratings.
It is mostly due to continued slowdown in China's growth, sluggish global trade growth, and an expected rise in US rates and resulting dollar strength.
"The expected slowdown in emerging Asia, however, is likely to be driven almost entirely by China," it said in its latest report today.
Fitch forecasts Indian growth to accelerate to 8 per cent in the fiscal year ending March 2017, while emerging Asia excluding China and India should grow by 5.2 per cent in 2016, up from 5 per cent in 2015.
The sovereign rating agency however warned that one potential downside risk could come from high private-sector debt, which is still rising.
Four Asian emerging markets have the highest ratios of bank private-sector credit to GDP of any Fitch-rated emerging markets - China, Malaysia, Thailand and Vietnam.
"Upward pressure on regional interest rates stemming from the US may weigh on domestic demand in more indebted economies."