International ratings agency Fitch has retained India's sovereign rating, maintaining that the country will continue to post good growth despite subdued prospects for the Asia-Pacific region amid expected increase in US rates, dollar strength and lower commodity prices.
“India and Vietnam have favourable macroeconomic prospects, partly reflecting lower exposure to some of the negative pressures affecting the region; however, weaknesses in their public finances have deterred us from taking positive ratings action,“ the report said. The agency retained India's sovereign rating at BBB- table the lowest investment grade.
Separately, Moody's said India's credit profile along with that of its key ASEAN peers has strengthened since the late 1990s. “Robust global growth and low interest rates facilitated credit improvements,“ Moody's said.
However, Moody's said the external environment is now less supportive, so sovereign credit trends will hinge on whether governments can animate domestic sources of growth without increasing financial risks.
Reviving growth will be a priority in 2016, but given skittish markets, the desire to sustain investor confidence will keep governments from unleashing stimulus that would raise macroeconomic imbalances, Moody's said in its latest sovereign report comparing India with five other ASEAN countries including China, Indonesia, Thailand, Singapore and Malaysia.
Fitch expects Emerging Asia growth to slow to 6.3% in 2016 from 6.5 % this year, driven almost entirely by a projected slowdown in China. Excluding the two giants China and India, the region is projected to expand 5.2% in 2016 from 5%, the fastest of any emerging region, it said in its report `Emerging Asia Sovereign Outlook 2016'.
It further said that emerging Asian external balance sheets are generally stronger than in 1996, the year before the Asian financial crisis broke. “Sovereigns are generally much less reliant on foreign currency financing, and many countries now have more flexible exchange-rate regimes in place of the more prevalent use of explicit pegs before 1997,“ Fitch said.
This gives authorities greater scope to let exchange rates act as a buffer today compared with the mid-1990s, it said.
Talking about the headwinds, the report said, “Dollar strength in the context of an expected rise in US rates, still sluggish global trade growth and lower commodity prices pose a challenging set of circumstances for Emerging Asia in 2016 which partly explains why the high growth rates of the mid-2000s look out of reach.“
The US Federal Reserve is largely expected to make its first rate hike in almost a decade during its upcoming December 15-16 meeting following recent positive jobs data.
“India and Vietnam have favourable macroeconomic prospects, partly reflecting lower exposure to some of the negative pressures affecting the region; however, weaknesses in their public finances have deterred us from taking positive ratings action,“ the report said. The agency retained India's sovereign rating at BBB- table the lowest investment grade.
Separately, Moody's said India's credit profile along with that of its key ASEAN peers has strengthened since the late 1990s. “Robust global growth and low interest rates facilitated credit improvements,“ Moody's said.
However, Moody's said the external environment is now less supportive, so sovereign credit trends will hinge on whether governments can animate domestic sources of growth without increasing financial risks.
Reviving growth will be a priority in 2016, but given skittish markets, the desire to sustain investor confidence will keep governments from unleashing stimulus that would raise macroeconomic imbalances, Moody's said in its latest sovereign report comparing India with five other ASEAN countries including China, Indonesia, Thailand, Singapore and Malaysia.
Fitch expects Emerging Asia growth to slow to 6.3% in 2016 from 6.5 % this year, driven almost entirely by a projected slowdown in China. Excluding the two giants China and India, the region is projected to expand 5.2% in 2016 from 5%, the fastest of any emerging region, it said in its report `Emerging Asia Sovereign Outlook 2016'.
It further said that emerging Asian external balance sheets are generally stronger than in 1996, the year before the Asian financial crisis broke. “Sovereigns are generally much less reliant on foreign currency financing, and many countries now have more flexible exchange-rate regimes in place of the more prevalent use of explicit pegs before 1997,“ Fitch said.
This gives authorities greater scope to let exchange rates act as a buffer today compared with the mid-1990s, it said.
Talking about the headwinds, the report said, “Dollar strength in the context of an expected rise in US rates, still sluggish global trade growth and lower commodity prices pose a challenging set of circumstances for Emerging Asia in 2016 which partly explains why the high growth rates of the mid-2000s look out of reach.“
The US Federal Reserve is largely expected to make its first rate hike in almost a decade during its upcoming December 15-16 meeting following recent positive jobs data.
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