Fitch said Asia-Pacific economies will post solid growth in 2018 as global trade and emerging market reforms continue, while the region's major central banks will likely keep policy rates low.
The rating agency forecasts global growth of 3.3% in 2018, up slightly from 3.2% last year. Fitch cited such factors as rising global trade volumes, accommodative fiscal and monetary policies, and the acceleration of reforms and major infrastructure plans in emerging economies.
Fitch expects Japan's GDP growth to come in at 1.5% in 2017, and weaken to 1.3% in 2018. It said the world's third-largest economy is on track for its longest period of expansion since 2001 and noted that the Bank of Japan's stimulus measures are starting to grip.
China's economic growth will likely slow down from 6.8% in 2017 to 6.4% in 2018 due to tightening credit, Fitch said. While the rest of APAC depends on China as an exports destination, regional effects from the slowdown will likely be mild.
Fitch expects APAC's major central banks to maintain low policy rates next year in response to the benign inflation environment, even as the Bank of Korea raised its policy rate for the first time in six years. The region could feel pressure from U.S. monetary tightening and the winding down of Eurozone easing, but most countries are "well-placed to cope" due to their current account surpluses or small deficits as well as large foreign exchange buffers.
Other risks on the APAC horizon include potentially higher debt-servicing costs that could hit economies with high corporate and household debt, ongoing tensions on the Korean peninsula, and increased U.S. protectionism as APAC economies accounted for more than three-quarters of the overall U.S. trade deficit in 2016, Fitch said.