Fitch Ratings highlights strong growth prospects for Asia’s ‘BBB’ sovereigns, including India, Indonesia, Malaysia, and the Philippines, supported by solid external buffers. However, fiscal risks diverge across countries, with weaker governance and constrained revenue ratios limiting flexibility. Thailand faces slower growth due to tourism recovery, despite stronger external finances.
Fitch Ratings has released its latest assessment of Asia’s ‘BBB’ category sovereigns, noting that while growth remains robust, fiscal vulnerabilities vary significantly across the region. Countries such as India (BBB-/Stable), Indonesia (BBB/Stable), Malaysia (BBB+/Stable), and the Philippines (BBB/Stable) benefit from strong external buffers and medium-term growth prospects.
Thailand (BBB+/Negative), however, is expected to see weaker growth, largely due to a lagging tourism recovery, though its external finances remain comparatively stronger. Fitch cautions that governance challenges and low revenue ratios continue to constrain fiscal flexibility across these economies, reducing their ability to respond effectively to shocks.
Key Highlights
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Strong Growth: India, Indonesia, Malaysia, and the Philippines show solid medium-term growth prospects.
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External Buffers: These sovereigns maintain stronger external positions compared to peers in other regions.
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Thailand Outlook: Growth weaker due to tourism recovery lag; external finances remain resilient.
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Fiscal Risks: Low revenue ratios and weaker governance metrics limit fiscal space.
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Outlook: Four of the five sovereigns retain Stable Outlooks, while Thailand is rated Negative.
Sources: Fitch Ratings (Fitch Wire), The Hindu BusinessLine, CNBC TV18