Asia continues to outperform other regions

Sri Lanka is among Asian countries that was able to mitigate risk of social unrest, Standard & Poor's said yesterday.

Asia continues to outperform other regions in terms of growth and sovereign credit trends. Despite generally stable credit quality, various factors have combined to make the policy environment tricky for sovereigns in the region, Standard & Poor's Ratings Services said in a report published on Monday.

The report, titled "Asia-Pacific Sovereigns In 2011: Generally Stable Credit Quality; Inflation, Capital Flows Make Policy Environment Tricky," said the challenges of strong capital inflows and rising inflationary pressures bring in important credit risks. Domestic politics and increasing geopolitical risks further complicate policy decisions.

In a number of countries, the risk of social unrest is present but mitigating factors are currently strong.

These are China, Vietnam, Sri Lanka, Malaysia, and Cambodia.

"The risks in these countries are mitigated by some combination of strong growth, low unemployment, and a degree of popular support for the government," Standard & Poor's credit analyst Elena Okorotchenko said.