However, US 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”, said the S&P report —  `Asia Pacific sovereigns brace themselves for headwinds from US’.

The report said  “economies with relatively small export sector and large domestic market, such as India, are going to be much less vulnerable to US recession-induced fall in export demand”.