ISLAMABAD: In its latest analytic report released on Tuesday, the US-based Moody’s Investors Service highlighted that the Asia-Pacific (APAC) region continues to drive global growth after the coronavirus pandemic-induced downturn.
“All Asia-Pacific economies – except the Philippines, Thailand and Malaysia – are expected to recover past their pre-pandemic levels by end-2021,” said the report.
According to Moody’s, all Asia-Pacific economies are anticipated to record growth in 2021. As of March 11, Moody’s Analytics forecasts India to record the strongest growth of 12pc, followed by China (8.3pc) and Vietnam (7.5pc). New Zealand, the Philippines, Taiwan, Singapore, Indonesia and Hong Kong are forecasted to grow by about 5pc to 6pc. The remainder – Malaysia, Australia, South Korea, Japan and Thailand – are forecast to grow by about 3 to 4pc.
In the second half of the year, the region is expected to be supported by increased immunity and less social distancing, together with the emergence of North America and Europe from Covid-19 restrictions, which will drive global spending, said the rating agency report.
According to Moody’s, a recovery in international trade, supportive fiscal policies, and measures to manage Covid-19 are other factors working in the Asia-Pacific region’s favour.
Globally, aggregate merchandise trade and industrial production made a full recovery in December, the report noted. Throughout North Asia and much of South-east Asia, exports are now above pre-Covid levels. Rising prices for crude oil, palm oil and other commodities are also contributing to the rising value of exports, for commodities producers like Indonesia and Malaysia.
On the fiscal end, APAC countries like Malaysia, Singapore, Japan and Australia have continued to provide modest stimulus in 2021, via targeted deficit spending, following aggressive policies last year. These countries provided more sizeable fiscal responses in 2020, measured as a percentage of GDP, compared to large economies like Canada, France, Germany, Italy and Brazil.
The pace of vaccinations is also expected to boost the region’s economy in the second half of the year. The report identified only the Philippines and Thailand to be lagging in their procurement of vaccines, though its forecast assumes they will acquire the vaccines needed, as the number of sources expands.
On balance, only Thailand, Malaysia and the Philippines are expected to take till next year for real GDP to grow past pre-pandemic levels. Thailand is forecast to reach that milestone in the first quarter of 2022, followed by Malaysia in the second quarter, and the Philippines in the third.
Thailand’s high exposure to travel and tourism is expected to continue hobbling its recovery for some time. Malaysia also depends heavily on tourism; and its economy ground nearly to a halt in the fourth quarter of last year, due to movement control orders, according to Moody’s.