KUALA LUMPUR, March 28 (NNN-Bernama) — The uncertainty due to the Russia-Ukraine military conflict as well as the pace of monetary policy normalisation, sluggish rebound in international tourism, tempered domestic demand and weak business sentiment could affect Asia Pacific (APAC) economies’ expansion.
Moody’s Investors Service (Moody’s) said however, the Asia-Pacific region’s economy is fundamentally sound and its critical export base continues to expand, allowing foreign reserves to increase, strengthening current account balances and stabilising currencies.
“APAC exports continued to rise through the early months of this year on the back of accelerating global trade throughout last year’s fourth quarter,” it said in a note.
It said China’s exports were remarkably strong, rising above expectations, while India, South Korea and Malaysia have also benefitted from strong demand and price increases for basic commodities such as palm oil, crude oil and food grains, as well as for semiconductors and its components, and autos and auto parts.
A few of the APAC commodity-producing economies perform even better in the March forecast, including Malaysia and Indonesia which benefitted from high prices for their commodity exports, it said.
However, Moody’s noted that inflation is high and rising in India, New Zealand, Thailand, Singapore and South Korea, to name a few.
“Central banks are watching inflation carefully to decide when to take their feet off the economic accelerator as the impacts of COVID-19 begin to fade, and they are also keeping an eye on the United States Federal Reserve (Fed).
“Should the Fed accelerate its path to policy normalisation, APAC central banks may have little choice but to commence policy tightening if they have not done so already,” it added.
— NNN-BERNAMA