KUALA LUMPUR – Asia Pacific’s (APAC) economic expansion is expected to slow down, said Moody’s Investors Service (Moody’s).
Moody’s released a note that said the APAC region’s economies could be affected due to the uncertainties from the Russian-Ukraine military conflict.
It also listed monetary policy normalisation, sluggish international tourism rebound, tempered domestic demand, and weak business sentiments as factors to dampen APAC economic growth.
Despite that, Moody’s said that the APAC region’s economy remains fundamentally sound. Furthermore, its critical export base continues to grow and allows for an increase in foreign reserves, strengthening its account balance 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 added.
Malaysia among countries benefiting from high commodity export prices
Moody’s said that China’s exports were strong and rising above expectations while India, South Korea, and Malaysia also benefitted from strong demand and price increase for commodities. These includes palm oil, crude oil, food grains, semiconductors and its components, as well as autos and auto parts.
Several of the APAC commodity-producing countries performed even better in March’s forecast, including Malaysia and Indonesia that saw demand from high prices for their commodity exports.
Aside from that, Moody’s also noted the high and rising inflation among countries including India, New Zealand, Thailand, Singapore and South Korea.
“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.
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