A-Pac growth outlooks diverge amid recovery from pandemic shock
May 03, 2021
Hong Kong, May 3 : Asia Pacific economies are recovering from the initial shock of the Covid-19 pandemic but intra-regional disparities in the magnitude of shock and durability of growth outlooks are increasingly evident, Fitch Ratings has said.
The underlying economic outlook for North Asia, Australia and New Zealand remains better than for South-east Asia and India partly due to their greater success in containing the virus.
North Asia in particular is also benefitting from strong global demand for electronics and semiconductors, said Fitch.
The pandemic continues to challenge regional growth outlooks, as highlighted by a renewed surge of cases in India, which can present risks to the forecast of 12.8 per cent growth in fiscal year ending March 2022.
Vaccination programmes offer potential relief, but progress has mostly been slow in A-Pac and further challenges may arise from variant Covid-19 strains, said Fitch.
Support to counter the pandemic's effects continues to weigh on credit metrics in most sovereigns. Only China is making a concerted effort to withdraw stimulus.
Further waves of the virus can cause the pace of fiscal consolidation among A-Pac sovereigns to diverge from our assumptions over 2021-22.
Nonetheless, firming growth prospects contributed to revision in outlook on Vietnam's rating to positive from stable and outlook on Macao's rating to stable from negative.
"Our confidence in growth prospects and consequent implications for public finances will influence how we resolve the negative outlooks that remain on sovereign ratings in Australia, India and Japan," said Fitch.
