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Asia petrochemical exports to take hit if US defaults on debt

July 26/2011

(ICIS) -- Asian petrochemical producers can expect a weakening of exports if the US - the worlds biggest economy - were to default on its debts, analysts said on Tuesday. However, the negative impact will likely be mitigated by the strength of demand coming from China and other emerging markets, they added.

The US needs a higher national borrowing ceiling via legislation by 2 August to prevent it from defaulting on its debts. However, the Republicans and Democrats in the US Congress cannot agree on a plan.

US President Barack Obama warned that a failure on Congress part to increase the debt ceiling could cost jobs and potentially cause serious damage to the US economy.

Overall consumption from the western industrialised economies will likely remain weak with the US and the eurozone preoccupied with their debt problems, analysts said. There are also concerns that the debt woes of both the US and eurozone may plunge the world economy back into recession, said Naphat Chantaraserekul, a Bangkok-based petrochemical markets analyst at DBS Vickers Securities.

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