KUALA LUMPUR – Moody’s Investors Service projects real gross domestic product for G20 economies to grow by 5.3% collectively this year, with the world’s two largest economies – the US and China – growing at 4.7% and 7.5%, respectively.
Citing Moody’s new report, group credit officer and senior vice-president Clara Lau said the stabilising corporate credit trends of the Asia-Pacific region are also supported by continued supportive fiscal and monetary policies across major advanced economies in 2021.
These measures will help to provide stable market liquidity, allowing funding access for companies.
“However, the pace of economic recovery is likely to be uneven across countries, depending largely on their pandemic management,” she said in a statement today.
The faster a country vaccinates its population and contains the pandemic – thus avoiding renewed lockdowns – the quicker its economic activity will recover.
Lau noted that persistent virus fears and its mutations are posing uncertainties in terms of sustained economic recovery.
Demand will remain sluggish if the recovery period is prolonged, which will raise the risk of business failures for small and medium enterprises, while unprecedented fiscal support to boost economic growth may create inflationary pressure.
“The Asia-Pacific’s credit trends will continue to stabilise this year, supported by China’s strong economic rebound and an almost full recovery of global demand for goods.
“At the end of the first quarter of 2021, the share of ratings with a stable outlook in the Asia-Pacific corporate portfolio increased to 78% from 72% in the previous quarter, and was at its highest level since the end of 2019,” she said.
Additionally, Lau noted that services demand is also resuming gradually as the roll-out of vaccination programmes helps to better contain the pandemic, enabling a gradual relaxation of social-distancing measures.
“However, recovery for contact-intensive sectors, such as travel, hospitality and gaming, will remain subdued this year, given movement restrictions.” – Bernama, April 19, 2021
