Asia Pacific area seen as stable by Moody's; China should be the regional engine for economic growth in the region
Moody's latest press realease has affirmed the stability of sovereign ratings in Asia-Pacific area. This region has strong growth coming from China, Phillipinees, Indonesia and Australia. These countries also enjoy much lower debt levels than is seen in the US and Europe. All in all, it seems very positive for investors going forward.
Over the last year there have been three countries that have been upraded, mainly China, Hong Kong and Indonesia. The only downgrade was Vietnam. Many countries have a changed outlook, including, Philippines and Thailand. Via Moody's:
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."