Bangkok--31 Jan--Moody's Investors
Moody's Investors Service says that sovereign ratings in Asia-Pacific remain resilient, supported by strong growth and the abilities of its robust economies to escape the effects of debt stress and sluggish macroeconomic conditions in the US and Europe.
"Asia-Pacific ratings have not been weighed down from the effects of the global crisis, and with the exception of Japan, government finances in the region were either unscathed, or are healing rapidly," says Tom Byrne, a Senior Vice President with Moody's Sovereign Risk Unit.
"Since the 2010 Mid-Year Outlook was published in August, there have been three upgrades (China, Hong Kong, and Indonesia) in Asia-Pacific, while the only downgrade was Vietnam," says Byrne. "Moreover, China's positive rating outlook was maintained; the Philippines' outlook was changed to positive from stable; and Thailand's outlook was changed to stable from negative."
Byrne was speaking on the release of Moody's sovereign outlook for Asia-Pacific -- which he authored -- and which analyzes trends in Northeast, South, and Southeast Asia, and the South Pacific.
Looking ahead, key credit fundamentals shared widely in the region continue to provide a high degree of ratings immunity to external shocks, the report says. These fundamentals include ongoing fiscal consolidation, strong external payments positions, low to moderate dependence on external funding for budget deficits or moderate levels of government debt, and well-capitalized banking systems.
At the same time, these fundamentals have been largely immune to geopolitical tensions between South and North Korea and to political turmoil in Thailand, although political risks remain high in Pakistan.
In addition, political event risk is unlikely to rise appreciably for those countries scheduled to hold elections this year, while natural disasters in some countries in recent months will have economic and fiscal effects, particularly in Pakistan. At the same time, current ratings for those countries capture such risks.
"During 2011, the main risks to the economic outlook center on inflation and growth in China. In view of muted growth prospects for the advanced countries in the post-crisis era, the ability of China to maintain relatively strong growth by containing inflationary pressures will be a key factor for the regional and global economic outlook," says Byrne.
"Moreover, moderation in regional GDP growth expected this year will be most evident in China and the export-oriented industrialized economies such as Japan, Korea, Taiwan, Hong Kong, and Singapore," says Byrne. "In contrast, Australia, India, and the emerging markets of ASEAN may see little or no deceleration in growth in the year ahead."
The report is entitled, Asia-Pacific Sovereign Outlook 2011. It can be found at www.moodys.com.