Emerging Asian countries seen to continue performing well in ’15
EMERGING Asian economies, including the Philippines, are primed to perform well in the next 12 months even as trading partners such as China, Europe and Japan slow down, and as policy adjustments in the United States affect global interest rates.
In a new report, Moody’s Investor Service said it remained confident in the prospects for Asia Pacific markets, noting that sound fundamentals should help countries cope.
“As global growth remains subdued with brighter prospects in the US offset by lackluster growth in the Euro area and Japan, and China’s ongoing slowdown, Asia’s resilience will become increasingly evident,” Moody’s chief credit officer Michael Taylor said.
Global challenges for 2015 include the US Federal Reserve taking the first steps to normalize monetary policy, sustained low commodities prices and China’s rebalancing. But Asia is supported by healthy external vulnerability metrics and the policy space to support growth through accommodative domestic monetary and fiscal policies, says Moody’s.
While Moody’s expects capital inflows to Asia Pacific to moderate in 2015, offshore borrowing costs will remain below historical norms, reflecting Asia’s sound fundamentals.
The region’s status as a net oil importer and the opportunity for governments to pare back subsidies mean falling crude prices will be credit positive for much of the region.
The Philippines started the year with ample buffers from potential external stresses despite volatile financial market conditions in 2014.
At the end of 2014, the BSP said the country’s reserves rose to a four-month high of $79.80 billion from $78.68 billion at the end of November. The government in November said it was expecting the country to end the year with $79 billion to $80 billion in dollar reserves.
The country’s reserves were worth about 10.2 times the economy’s monthly import bill. It was enough to cover 8.4 times the country’s external debt based on original maturity.
Moody’s identified four key risks for the year ahead: a deeper-than-expected property downturn in China, high leverage in certain sectors, renewed eurozone concerns and a spike in global financial market volatility.
