Export-led APAC growth faces headwinds from US tariffs: Fitch Ratings

In a new report, the rating agency said governments’ policy responses to the trade war will be key towards its impact on APAC sovereign ratings.

“Governments may opt to shore up economic growth with fiscal stimulus, which could significantly alter the outlook for public finance metrics over the medium term and sovereign credit profiles more broadly,” Fitch said in a release citing the report.

The trade war has created uncertainty, but all APAC sovereign outlooks are stable after the downgrade of China’s rating to ‘A’/stable on April 3 from ‘A+’/negative. This reflects Fitch’s expectation of a continued deterioration in China's public finance profile, it noted.

In its view, sustained fiscal stimulus will support growth amid subdued domestic demand in the region, rising tariffs and deflationary pressures.

The April 15 upgrade of Pakistan’s rating to ‘B-’/stable from ‘CCC+’ reflects Fitch’s increased confidence that Pakistan will sustain its recent progress on narrowing budget deficits and implementing structural reforms, supporting its International Monetary Fund (IMF) programme performance and funding.

Fibre2Fashion News Desk (DS)