Fitch reinforces mostly stable outlook for Asia Pacific amid slowing global growth

Despite a slowing global growth, sovereign outlooks in Asia Pacific (APAC) remain mostly stable, credit watcher Fitch Ratings said Tuesday.

In a commentary, Fitch maintained a stable outlook on most APAC sovereigns, positive for Thailand and Vietnam, and negative for Hong Kong.

“A challenging year is in store as slowing global growth and trade policy uncertainty take their toll on APAC exports and growth momentum,” said Stephen Schwartz, head of APAC Sovereign Ratings.

“Nevertheless, Fitch maintains a stable outlook for the region, due to adequate financial buffers and policy space to support domestic demand,” he said.

The Philippines currently has a BBB investment grade rating with stable outlook from Fitch, which indicates that expectations of default risk are currently low.

“The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity,” said Fitch.

Geopolitics will likely continue, with tensions between the United States and China, according to Fitch.

“Frictions between the US and China over trade, technology, and regional influence, irrespective of prospects for a ‘Phase One” trade deal or the outcome of US elections, will continue to reverberate,” it said.

The credit watcher also noted that intra-regional trade relations will be important to monitor.

“The rift between Japan and Korea continues after the imposition of export restrictions imposed by Japan on key materials used in the semiconductor and display industries, the subsequent removal of Korea from its export ‘white list’, and retaliation in kind by Korea,” it said. —VDS, GMA News