Moody’s latest (presented at Moody’s 2015 Outlooks for Asian Sovereigns, Corporates and Banks Briefing held today in Hong Kong.) …

Global growth outlook brings challenges to Asia Pacific, but region’s strengths prevail

In summary …

Says Asia will be resilient to global macroeconomic challenges in 2015

  • With less vulnerability to external shocks than other emerging economies
  • With sound fundamentals that compare well with many regions in the world
  • policy space to support growth through accommodative domestic monetary and fiscal policies
  • region’s status as a net oil importer and the opportunity for governments to pare back subsidies mean that falling crude prices will be credit positive for much of the region.
  • “As global growth remains subdued with brighter prospects in the US offset by lacklustre growth in the Euro Area and Japan, and China’s ongoing slowdown, Asia’s resilience will become increasingly evident,” says Michael Taylor, a Moody’s Chief Credit Officer.

Global challenges for 2015 include:

  • US Federal Reserve taking the first steps to normalize monetary policy
  • Sustained low commodities prices
  • China’s rebalancing

Key risk for Asia:

  • A deeper-than-expected property downturn in China
  • High leverage in certain sectors (elevated household debt to GDP ratios in certain areas in Asia—Malaysia, Thailand, and Singapore, among others—could become a concern if interest rates spike during the year,)
  • Renewed eurozone concerns
  • Spike in global financial market volatility