NEW DELHI: Unlike South Korea and Singapore, India, along with China, has been placed in the ‘not vulnerable’ category by international credit rating agency Standard and Poor’s (S&P) with regard to the fallout of the recession in the U.S. In its report, the rating agency has, however, noted that the U.S. recession could “lead to a decline in capital inflows and weaker exports, particularly of services. This could affect the capital and current account and put pressure on the balance of payment surplus”.

The report titled ‘Asia Pacific sovereigns brace themselves for headwinds from U.S.’ has pointed out that the countries that are ‘vulnerable’ to the U.S. recession are Pakistan, Singapore, South Korea, Malaysia, the Philippines and Thailand while those in the ‘moderately vulnerable’ category include Japan, Australia, Hong Kong, Indonesia and Sri Lanka.

The S&P report highlighted the fact that “economies with a relatively small export sector and a large domestic market, such as India are going to be much less vulnerable to a U.S. recession-induced fall in export demand.”However, on the likely credit implications of the U.S. slowdown on India, the report viewed that a widening current account deficit could put some pressure on the country’s external position.