MOODY’S ON APAC Stable outlook for creditworthiness
Moody's Investors Service says that its outlook for sovereign creditworthiness in Asia Pacific (Apac ) in 2019 is stable overall, reflecting its expectations for the fundamental credit conditions that will drive sovereign credit over the next 12-18 months.
Solid domestic fundamentals, including rising incomes and competitiveness, generally ample foreign exchange reserves and often sizeable domestic savings, will continue to underpin government credit quality.
However, growth is slowing and further downside risks have intensified.
Risks stem from tensions between the US (Aaa stable) and China (A1 stable), tightening global financing conditions, and shifting political and policy priorities domestically.
A weaker economic outlook means that the window for addressing credit challenges is closing.
Moody's expects the pace of economic expansion in Apac to soften in 2019-20, but remain robust. Asia's emerging and frontier market economies are likely to experience the sharpest deceleration in 2019, with likely median GDP growth rates of 5.5 per cent and 5.2 per cent respectively, weaker than Moody's estimates for 2018. Meanwhile, growth in the advanced economies will likely slow to 2.5 per cent.
Growth will be underpinned by rising incomes and competitiveness, supported in turn by infrastructure investment. And ample foreign exchange reserves and domestic savings provide substantial buffers against external shocks, the report said.
