Moody’s says Asia more resilient to COVID-19 economic shocks
News Type: Marketing News
The report comes after Moody’s retained Cambodia’s B2 stable credit rating at the start of the year, crediting its robust gross domestic product growth prospects for its confidence in Cambodia’s debt management. KT/Mark Hughes
The Singaporean investor service Moody’s sees Asia as being in a better position to absorb the ongoing economic shock of the COVID-19 pandemic in 2021 than other global regions.
“Most economies in Asia entered the pandemic with stronger starting positions, in terms of growth and external metrics, as compared with other regions. Countries with stronger governance and better control over the pandemic will face fewer strains on growth prospects and [have] a quicker reversal of negative fiscal metrics,” it said.
However, it said the Coronavirus fallout will weigh on near-term growth and pose risks to growth prospects over the next few years.
“While the scale of policy support across the region has been unprecedented in the wake of the pandemic, these measures are unlikely to fully mitigate the effects of the Coronavirus on near-term growth. A number of secular shifts will accelerate as a result of the pandemic, which will further drive the differentiation in credit quality. Supply-chain reconfiguration, increased digitisation and the capacity to address rising social inequalities resulting from a setback in living standards will have divergent effects across the region,” it continued.
Moody’s said that long-standing risks will continue to weigh on economies.
“There is significant uncertainty around the future path of the pandemic and economic disruptions. Given this uncertainty, sudden shifts in sentiment could induce unstable capital flows in the region, although funding likely will be less of a constraint as a whole in Asia in 2021 [than it was] in 2020 because of ample liquidity. Shifts in sentiment would challenge highly indebted Asian issuers. The risk of extreme weather events is also rising amid global climate change,” it added.
The report comes after Moody’s retained Cambodia’s B2 stable credit rating at the start of the year, crediting its robust gross domestic product growth prospects for its confidence in Cambodia’s debt burden.
A report by the World Bank was also positive about the Kingdom getting growth back on track in 2021.
“The economy was projected to contract by 2 percent in 2020 but is expected to bounce back and grow by 4 percent in 2021, it added.
The report recommended boosting pro-poor and growth-enhancing public investment including cash-for-work projects, while promoting labour-intensive sectors to generate jobs by taking advantage of the quick recovery of domestic demand for consumer goods.
It also noted the opportunities to facilitate an expansion of domestic and foreign investment arising from recent bilateral and regional free trade agreements, including the Cambodia-China Free Trade Agreement and Regional Comprehensive Economic Partnership.
However, the Development Outlook update published in September by the Asian Development Bank went one step further, predicting that the Cambodian economy would rebound at a 5.9 percent growth rate with inflation predicted at 1.8 percent in 2021.
“The enhancement of agricultural performance and increased volume of non-garment manufacturing exports are among the explanatory factors,” it said.
Source from: KHMER TIMES