Asia Pacific growth will see intra-regional disparities though economies are recovering from the initial shock of the pandemic, said Fitch Ratings recently.
The credit rating agency expects APAC economic growth to rebound to 7.2% in 2021 after last year’s contraction of 0.9%, underpinned by continued momentum in China and a rebound in India.
However, rapid growth in part reflects the scale of the shock in 2020, the firm said.
The underlying economic outlook for North Asia, Australia and New Zealand remains better than for south-east Asia and India partly due to their greater success in containing the virus, Fitch noted.
North Asia, in particular, is also benefitting from strong global demand for electronics and semiconductors, Fitch added.
The pandemic continues to challenge regional growth outlooks, as highlighted by a renewed surge of cases in India, which could present risks to our forecast of 12.8% growth in the fiscal year ending March 2022, according to the firm.
Vaccination programmes offer potential relief, but progress has mostly been slow in the region and further challenges to Asia Pacific growth may arise from variant Covid-19 strains, the firm noted.
Support to counter the pandemic’s effects continues to weigh on credit metrics in most sovereigns, Fitch pointed out.
Only China is making a concerted effort to withdraw stimulus, according to Fitch.
Further waves of the virus could cause the pace of fiscal consolidation among Asia Pacific sovereigns to diverge from Fitch’s assumptions over 2021-2022, the credit rating agency said.