AsPac credit outlook stable – Moody’s

MANILA, Philippines - The credit outlook on Asia Pacific economies including the Philippines remains stable, according to international credit rating agency Moody’s Investors Service.

“The credit outlook in Asia Pacific is stable, although the slowdown in China’s expansion, rising interest rates, and lackluster growth in advanced countries are constraining regional economies,” Moody’s said in a statement.

The debt watcher in October last year upgraded the Philippines’ rating to investment grade (Baa3) with a positive outlook.

Of the 22 sovereigns rated by Moody’s in the Asia Pacific region, 19 have stable outlooks, indicating  that  steady credit conditions are expected in the next 12 to 18 months.

 “A focal point for investors has been the extent to which activity in China will cool as authorities wean the region’s largest economy off its dependence on public-backed and credit-fueled investment for growth,” Moody’s said.

 “Moody’s takes the view that policymakers will be able to achieve a soft landing, with GDP expanding between 6.5 percent and 7.5 percent this year and next,” it added.

 “But in the case of a steeper downturn in demand, large commodity exporters such as Australia and Indonesia would be most exposed. In contrast, among Asean countries, the Philippines could be the best insulated against a further slowing in Chinese growth given its reliance on domestic demand, services exports, and overseas workers’ remittances,” Moody’s said.

The debt watcher also said that tighter funding conditions after the US Federal Reserve puts an end to its massive asset purchases would affect the region although there will be differing levels of impact depending on a country’s reliance on external financing.

Despite the stable outlook on the region, Moody’s has lowered its full-year forecast for the Philippine economy to six percent from April’s projection of 6.5 percent.