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KUALA LUMPUR, April 19 -- Moody's Investors Service projects real gross domestic product for G-20 economies to grow by 5.3 per cent collectively in 2021, with the world’s two largest economies, the United States (US) and China, growing at 4.7 per cent and 7.5 per cent, respectively.
Citing Moody’s new report, group credit officer and senior vice-president Clara Lau said the stabilising corporate credit trends of Asia-Pacific are also supported by continued supportive fiscal and monetary policies across major advanced economies in 2021.
These measures help to provide stable market liquidity, allowing funding access for companies.
“However, the pace of economic recovery is likely to be uneven across countries, depending largely on their pandemic management,” she said in a statement today.
The faster a country vaccinates its population and contains the pandemic -- thus avoiding renewed lockdowns -- the quicker its economic activity will recover.
Lau noted that persistent virus fears and its mutations are posing uncertainties in terms of a sustained economic recovery.
Demand will remain sluggish if the recovery period is prolonged, which will raise the risk of business failures for small and medium-sized enterprises, while the unprecedented fiscal support to boost economic growth may create inflationary pressure.
“The Asia Pacific's credit trends will continue to stabilise this year, supported by China's strong economic rebound and an almost full recovery of global demand for goods.
“At the end of the first quarter of 2021, the share of ratings with a stable outlook in the Asia Pacific corporate portfolio increased to 78 per cent from 72 per cent in the previous quarter, and was at its highest level since the end of 2019,” she said.
Additionally, Lau noted that services demand is also resuming gradually as the rollout of vaccination programmes helps to better contain the pandemic, enabling a gradual relaxation of social distancing measures.
"However, recovery for contact-intensive sectors such as travel, hospitality and gaming will remain subdued this year, given movement restrictions,” she added.