APAC SET TO GROW FASTER THAN MENA, LATIN AMERICA IN 2021, 2022 -- MOODY'S

KUALA LUMPUR, Aug 3  -- Asia Pacific (APAC) is likely to grow faster in 2021 and 2022 than the Middle East and North Africa (MENA), and Latin America, but the performance will increasingly diverge within the region, Moody's Investors Service said in a report.

The ratings agency said the economic rebound, fuelled in large part by China, masked a range of output losses across the region.

Moody’s forecasts about 30 per cent of APAC economies would face a modest degree of scarring, experiencing an output decline of 2.0 per cent-8.0 per cent below its pre-pandemic forecast (GDP) levels by 2023.

“These include mainly lower-to-upper middle-income economies and those struggling to contain a virus resurgence, such as Malaysia (A3 stable), Indonesia (Baa2 stable) and Thailand (Baa1 stable)," Moody’s assistant vice-president and analyst Deborah Tan said in a statement today. 

However, more than 40 per cent of the region's economies will have output losses exceeding 8.0 per cent of pre-pandemic GDP forecast levels, Moody’s said.

Economies with the deepest scarring generally have concentrated economic structures or weaker institutional capacity.

Moody’s said these were economies with lower-middle incomes, with deep scarring likely to increase social risks and in some of these economies, high debt burdens were limiting governments' fiscal space to withstand the pandemic.

It noted that economies that emerge relatively unscathed had generally mounted effective health responses and provided more fiscal support.

Nearly 30 per cent of APAC’s economies will record strong post-pandemic growth and return to pre-crisis GDP levels by 2022 or 2023, said Moody’s, adding that these economies mainly have high incomes, mature institutions, strong healthcare infrastructure, and dynamic labour markets.

Moody’s said secular trends accelerated by the pandemic could affect the depth of scarring beyond 2023 and these include automation and trade regionalisation, which could have longer-lasting effects on social risks and the reallocation of investments across countries.

-- BERNAMA