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ֳ Wire

Most APAC Sovereigns’ Recovery to Firm as Vaccination Rises

Wed 06 Oct, 2021 - 6:15 AM ET

Related ֳ Content: APAC Sovereign Credit Overview 4Q21

ֳ-Hong Kong-06 October 2021: Significant improvement in vaccination rates for most sovereigns in APAC over 2H21 should put their recovery from the Covid-19 shock on a firmer footing, says ֳ. However, growth in 2021 will be below the 7.2% we had projected in the 2Q21 APAC Sovereign Credit Overview, following the setbacks caused by Covid-19 outbreaks in many economies over recent months.

Higher levels of vaccination and easing outbreaks across much of APAC have resulted in the gradual lifting of some of the restrictions imposed to curb the spread of the virus. As a result, we still expect the region’s growth to average 6.3% in 2021 and 5.3% in 2022, despite the impact of the recent Covid-19 waves, outpacing global growth (ex-APAC) in both years, of 5.8% and 3.9%, respectively.



Vaccination rates remain relatively low in south Asia and parts of ASEAN, which could leave sovereigns in these regions more vulnerable to further pandemic-related setbacks. Potential new outbreaks that cause economic scarring and damage medium-term growth prospects could add to adverse rating pressure, notably for some sovereigns whose ratings are on Negative Outlook, such as India (BBB-/Negative) and the Philippines (BBB/Negative).

China’s vaccination rates (A+/Stable) are high, but growth will face headwinds from a retrenchment in the key property sector. The authorities are recalibrating policy settings to offset the growth challenges, but we have lowered our China growth forecasts in 2021 and 2022 to 8.1% and 5.2%, respectively. Slower growth in China, together with the tapering we expect by the US Fed, could have broader negative repercussions, especially for the region’s emerging and frontier markets.

The report, "APAC Sovereign Credit Overview 4Q21" is available at or by clicking the link above.

Contact:

Stephen Schwartz
Senior Director, Sovereigns
+852 2263 9938
ֳ (Hong Kong) Limited
19/F Man Yee Building
68 Des Voeux Road Central, Hong Kong

Duncan Innes-Ker
Senior Director, ֳ Wire
+852 2263 9993

Media Relations: Leslie Tan, Singapore, Tel: +65 6796 7234, Email: leslie.tan@thefitchgroup.com
Wai Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@thefitchgroup.com

The above article originally appeared as a post on the ֳ Wire credit market commentary page. The original article can be accessed at . All opinions expressed are those of ֳ.


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