Connect with us

Banking

Thailand to benefit from trade and investment diversion away from China

In a recent research report Moody’s identifies which Asian countries are most vulnerable to slower global trade volumes and which stand to gain.

Published

on

Shifts In Production Chains Positive For A Few Sovereigns Over Time

In a recent research report Moody’s identifies which Asian countries are most vulnerable to slower global trade volumes and which stand to gain.

— Hong Kong, Singapore, Taiwan, Vietnam and Mongolia are among the most exposed in Asia Pacific to a sustained trade slowdown in China.
— But Taiwan and Vietnam also stand to benefit the most, along with Thailand and Malaysia, from trade and investment diversion away from China.

Asia Pacific: Spillovers From Slowing Trade Weigh On Growth

Moody’s Investors Service has examined 23 rated countries in Asia Pacific and identified in a just-released report, countries that benefit the most and those which are the most vulnerable to falling trade volumes globally, in part because of the ongoing and broad-based tensions between the US (Aaa stable) and China (A1 stable).

“Given the uncertain outlook for growth and trade policy, as well as generally tighter financing conditions, slower investment growth will amplify the trade slowdown, especially in Hong Kong, Singapore, Taiwan, Vietnam and Mongolia,”

Christian de Guzman, a Moody’s Vice President and Senior Credit Officer.

Shifts In Production Chains Positive For A Few Sovereigns Over Time

Unsurprisingly, countries that already participate in the regional manufacturing supply chain have the greatest export similarity to China, notably Vietnam, Korea, Thailand, Taiwan, Japan (A1 stable) and Malaysia. While among the most susceptible to the direct impact of slower trade flows as described above, these countries are at the same time best positioned to benefit from positive spillovers.

Sovereigns - Asia Pacific: Spillovers From Slowing Trade Weigh On Growth; Shifts In Production Chains Positive For A Few Sovereigns Over Time
Sovereigns – Asia Pacific: Spillovers From Slowing Trade Weigh On Growth; Shifts In Production Chains Positive For A Few Sovereigns Over Time

“And, gains from trade and investment diversion away from China will depend on industrial structure, scalability and labor costs — potentially benefiting Taiwan, Thailand, Malaysia and Vietnam — although the reconfiguration of supply chains will occur only over time,”

Christian de Guzman

Higher public spending can mitigate flagging external demand, especially in Singapore (Aaa stable), Korea (Aa2 stable) and Taiwan (Aa3 stable), because these countries’ strong fiscal positions provide scope for potentially greater support.

Countries such as Bangladesh (Ba3 stable) are also less vulnerable to a softening in Chinese demand because of their reliance on trade outside of Asia Pacific.

Banking

Fitch Affirms Thailand’s rating at ‘BBB+’ with a Stable Outlook

Fitch forecasts Thailand’s tourism-dependent economy will recover only modestly, by 1.8% in 2021 after a sharp 6.1% contraction in 2020.

Published

on

Don Mueang Bangkok domestic airport
Empty seats tagged with social distancing await passengers in Don Mueang Bangkok domestic airport

Fitch Ratings has affirmed Thailand’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB+’ with a Stable Outlook.

(more…)
Continue Reading

Economics

China’s new three-child policy highlights risks of aging across emerging Asia

Thailand’s (Baa1 stable) total dependency ratio is set to jump nine percentage points to 51% by 2030 – a faster increase than China’s – which will pressure public and private savings through higher taxes and social spending, reducing innovation and productivity gains.

Published

on

Street vendor in Bangkok

Population aging in China (A1 stable) and other emerging markets in Asia will hurt economic growth, competitiveness and fiscal revenue, unless productivity gains accelerate, according to a new report by Moody’s Investors Service.

(more…)
Continue Reading
Wise

Most Viewed

Subscribe via Email

Enter your email address to subscribe and receive notifications of new posts by email.

Join 14,105 other subscribers

Recent