In contrast to the negative forecast for sovereigns internationally, Moody’s Investors Service reported on Monday that the credit worthiness outlook for countries in the Asia-Pacific (APAC) region, including India, for 2023 is stable.
With restricted government liquidity risks, generally stable debt dynamics, and generally solid external positions, the region’s debt sustainability and financial stability are pretty well anchored, according to a report by the credit rating agency.
It added that despite greater global inflation and tighter financial conditions, gross domestic product (GDP) growth will stabilise close to potential levels and outperform other areas. The majority of sovereigns have started fiscal austerity, but the pace is being slowed by social pressures.
For India, which is still recovering from the epidemic, Moody’s anticipates that output gaps would persist.
According to a research from the rating agency published by IANS, debt affordability has been anchored in India, Malaysia, and Thailand because of their extensive institutional investor bases and banking systems.
The paper claims that high commodity prices will prevent expenditure on food and fuel subsidies or other measures from declining, especially in countries like Bangladesh and India where elections are expected to take place in 2023 or early 2024.
consolidation of the finances, yet societal forces are stalling development.
Most regional governments’ budgetary deficits are probably equal to or very close to their debt-stabilizing fiscal balances. According to Moody’s, debt loads will either keep increasing or stabilise at higher levels in nations like Malaysia and India.
According to the rating agency, as interest rates rise, debt affordability will decline from generally strong levels and remain manageable for the majority of people in the area.
The main concerns include slower Chinese economic development for an extended period of time, severe credit constraints for frontier economies with worse credit ratings that will continue to see increased liquidity and currency depreciation pressures, as well as local and international politics.
consolidation of the finances, yet societal forces are stalling development.
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