Credit conditions in Asia will be steady this year due to regional and global economic growth, according to Moody’s Investors Service. A global trade recovery and broad-based accommodating monetary policies will also contribute to the stable outlook.
Moody’s prediction is based on several outlooks surrounding regional sovereigns and the banking and corporate sectors. Despite steady credit conditions, there are risks, such as “tighter financing conditions, the threat of increased trade protectionism and geopolitical tensions,” noted Moody’s.
Japan and India will see positive growth, while China will slow slightly. The Philippines and Vietnam will expand their economic performance and stand out among ASEAN countries. "For the first time since the Global Financial Crisis, we are seeing a synchronized expansion across all the major economies. … Asia will remain the fastest-growing economic region in the world, supported by a recovery in global trade and continued accommodative monetary policies by Asian central banks,” said Moody's Managing Director and Chief Credit Officer for Asia Pacific Michael Taylor in the release.
Moody’s has stable outlooks on 13 of the 16 banking systems in the region, while there are two systems with a positive outlook. Some of the risks that could compromise the credit condition outlook are the tariffs imposed by the U.S.—this will have an immediate impact of credit in the APAC region. "U.S. tariffs, if they signal rising protectionism, could hurt rated manufacturers, sovereigns,” noted a separate Moody’s report. Other risks include the tension in the Korean peninsula and South China Sea, but Moody’s doesn’t expect either to lead to conflict.
-Michael Miller, associate editor