Countries in the Asia Pacific region are more vulnerable to the economic impact the coronavirus outbreak poses, reveals a new report from Moody’s Investors Service.
February 13, 2020 | Justin Tamang- Asia Pacific economies are more exposed to the impact of the outbreak because of strong tourism and trade ties with China, but tend to have strong buffers against it
- Impact of the outbreak will be muted in the Americas and Europe
- A prolonged outbreak may bring forth disruptions to supply chains, keep commodity prices low, and pose further economic effects
As the coronavirus outbreak continues, Moody’s Investors Service sees impending negative repercussions to economies all around the globe, especially to those in the Asia Pacific (APAC) region. Strong trade and tourism ties with China make APAC economies more exposed to the outbreak’s impact, according to a recent Moody’s report.
"The most immediate economic implications from the coronavirus outbreak will manifest through a fall in tourist arrivals from, and weaker exports of goods to China and other economies integrated into the Chinese supply chain," noted Moody's vice president and senior analyst Anushka Shah.
A different report from Moody’s – an international financial research provider – has already noted a reduction in traffic at APAC airports and considered it a credit negative.
Strong economic buffers provide resilience
Despite the current situation, there is an expectation for these sovereigns’ credit profiles to remain resilient. Moody’s points to strong economic buffers that may be able to keep the outbreak’s negative effects to a minimum.
“The buffers available to most sovereigns that are particularly exposed through the trade and tourism channels are relatively strong, meaning credit-negative implications will be limited," said Shah.
The report noted that the impact would not be as intense in Europe and the Americas, citing modest trade and tourism links between countries in these regions and China.
The credit rating agency currently estima...
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