Credit rating agency Moody's said on Wednesday it expects a stable outlook for sovereign credit in the Asia Pacific region through 2019 despite the uncertainty generated by the trade war between the United States and China.
"Solid domestic fundamentals, including increased wages and competitiveness, generally large foreign exchange reserves and a considerable domestic saving in many cases, will continue to underpin the quality of government credit," Moody's said in a statement.
In a new report, the agency indicated that it expects the economic expansion in the region to "soften" in 2019-20 although it will remain "robust", with a greater deceleration in emerging countries, which will grow between 5.5 and 5. , 2%, while advanced economies will do so at 2.5%.
In its analysis, Moody's indicated that it took into consideration all trade barriers and investment implemented or planned between the US and China, whose relationship the rating agency expects to move from the conflict to the agreement on trade, investment, technology and geopolitics.
"The tensions between the US and China can discourage investment and be a burden for potential growth beyond Moody's current assumptions given the exposure of trade to China and the integration of manufacturing supply chains in Asia Pacific," he added. the agency.
According to the rating agency, risks higher than expected would weaken the accessibility of the debt and increase the liquidity risks of governments, especially those of border markets.
He also pointed out that a change of domestic priorities away from fiscal consolidation or a political reorientation to address the weakness of the financial sector would pose another risk to the credit profile of some emerging and border markets.
Moody's added that in the advanced economies, a greater focus on social welfare and more inclusive growth could damage profitability and short-term investment while promoting social cohesion and the efficiency of long-term policies.