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COMMENTS

Asia-Pacific Sovereign Rating Trends 2020


Asia-Pacific Sovereign Rating Trends 2020

Rating Outlook And Trends

The sovereign rating outlook for the Asia-Pacific region going into 2020 is broadly stable. There are 17 sovereign credit ratings with stable outlooks, one with negative outlook, and three with positive outlooks (Japan, New Zealand, and Thailand) in the region as of Jan. 15, 2020 (see chart 3). The average Asia-Pacific sovereign rating now lies between 'BBB' and 'BBB+'. It was lifted by the upgrades of Indonesia, Philippines, Vietnam, and Fiji in 2019.

Chart 1

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Chart 2

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Chart 3

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Table 1

Asia-Pacific Sovereign Rating Score Snapshot
Issuer Sovereign foreign currency ratings Institutional assessment Economic assessment External assessment Fiscal assessment, budget performance Fiscal assessment, debt Monetary assessment

Australia

AAA/Stable/A-1+ 1 1 6 1 1 1

Bangladesh

BB-/Stable/B 5 4 2 6 4 4

China

A+/Stable/A-1 3 1 4* 2 3

Cook Islands

B+/Stable/B 5 4 5 2 1 6

Fiji

BB-/Stable/B 5 4 3 4 3

Hong Kong

AA+/Stable/A-1+ 3* 1 1 1 2 2

India

BBB-/Stable/A-3 3 4 2 6 6 3

Indonesia

BBB/Stable/A-2 3 4 3 3 2 3

Japan

A+/Positive/A-1 2 1 1 5 6 2

Korea

AA/Stable/A-1+ 3 1 1 1 4 2

Malaysia

A-/Stable/A-2 3 4 2 3 4 2

Mongolia

B/Stable/B 5 4 6 6 4

New Zealand

AA/Positive/A-1+ 1 1 6 2 1 1

Pakistan

B-/Stable/B 6 5 6* 6 6 4

Papua New Guinea

B/Stable/B 5 6 6 4 5 5

Philippines

BBB+/Stable/A-2 4 4 1 3 2 3

Singapore

AAA/Stable/A-1+ 1 1 1 1 1 1

Sri Lanka

B/Negative/B 5 5 6 5 6 4

Taiwan

AA-/Stable/A-1+ 3 3 1 2 3 2

Thailand

BBB+/Positive/A-2 4 4 1 3 2

Vietnam

BB/Stable/B 4 4 3 4 4 4
*Deterioration since June 2019. §Improvement since June 2019.

Table 1

Asia-Pacific Sovereign Rating Score Snapshot (cont'd)
Institutional assessment Economic assessment External assessment Fiscal assessment, budget performance Fiscal assessment, debt Monetary assessment
% of Sovereigns with a score of '1' 14 29 38 19 19 14
% of Sovereigns with a score of '2' 5 0 14 14 24 29
% of Sovereigns with a score of '3' 33 10 14 19 10 19
% of Sovereigns with a score of '4' 14 48 0 24 19 24
% of Sovereigns with a score of '5' 29 10 5 10 5 10
% of Sovereigns with a score of '6' 5 5 29 14 24 5
Median 3 4 2 3 3 3
Mean 3.5 3.2 3.0 3.3 3.4 3.0
Standard Deviation 1.5 1.6 2.2 1.7 1.9 1.4
*Deterioration since June 2019. §Improvement since June 2019.

Viral Outbreak Casts A Shadow Over Asia-Pacific Sovereigns

A U.S.-China "trade war" may be averted for the time being, but renewed tensions in the Middle East and the spread of a new viral infection take over as risks to Asia-Pacific sovereign credit support.

Trade tensions ease for now

Until the U.S. elections are over, it seems unlikely that U.S.-China trade tensions would increase significantly again. As we assumed in the July 2019 edition of this report, trade tariffs between the two countries were not markedly increased in late 2019. The recently signed "phase one" agreement ushered in a period of truce that could last until the U.S. presidential elections near the end of the year.

Given the strategic nature of the tensions between the two nations, trade tariffs could once again go up after that. Nevertheless, the agreement gives both economies some breathing space at a time when growth is slowing. Although the trade tensions have not affected Chinese growth seriously so far, the negative impacts are evident. Growth of Chinese exports has turned negative over parts of 2019 while that of manufacturing sector investment has also declined significantly.

A new disease threatens the region

While external concerns ease, domestic developments keep Chinese policymakers busy. A new viral infection has emerged as a threat to human lives and regional economic growth early in 2020. First discovered in the city of Wuhan in China, the coronavirus appears to have led to numerous deaths and have infected thousands of people both in and outside of China. Efforts to contain the disease is made more difficult by the Lunar New Year travel season in China.

Authorities in China and the region appear to have responded relatively quickly and decisively to the outbreak, despite some criticisms about an initial lack of transparency. Nevertheless, it seems likely that the disease will spread further before it is contained. Apart from the risk to human lives, it could negatively affect travel and consumption activities. In a scenario of widespread infection, it could materially weaken economic growth and fiscal positions of governments in Asia.

U.S.-Iran tensions have escalated further

Geopolitical risks in the Middle East remain a potential source of pressure on sovereign credit metrics in the Asia-Pacific. Tensions have diminished since the events immediately following the killing of one of Iran's top military leaders early this year. Nevertheless, the situation remains tense and tensions could rise suddenly. In late January, rockets struck the U.S. embassy in Baghdad and injured one person. If a future attack causes significantly more casualties, this could raise the risk of war again.

This will be negative for most parts of Asia that are dependent on imported sources of energy. It could also increase investors' risk averseness, which worsens the funding conditions for emerging markets in the region.

It is also possible that further destabilizing actions from the Democratic People's Republic of Korea (DPRK, North Korea) could add to uncertainties. The North Korean regime has expressed its impatience at the lack of progress regarding its demands for easing economic sanctions on the country. Toward the end of 2019, it appeared to be signaling that it would resume key weapon testing soon. Even if its potential provocations do not lead to military confrontation, they could create short-term financial market volatility.

Weaker fiscal performances this year as governments increase support for their economies

If the virus outbreak spreads widely or if the risk of military confrontation intensifies, slower economic growth would exacerbate already weaker fiscal performance in many parts of the Asia-Pacific. Slower growth in 2019 and the expectations of continued economic uncertainties in 2020 have led the governments in major economies--including China, India, Korea, and Thailand--to run larger deficits. In Japan, the government has also increased spending to offset the impact of the sales tax hike implemented late in 2019. The Australian budget position is also likely to be hurt by costs related to the ongoing bushfire (see "Australia Sovereign And State Ratings Can Accommodate Bushfire Impact," published Jan. 13, 2020) while the Hong Kong government expects its first fiscal deficit in 15 years as a result of the series of protests that have rocked the city since June 2019.

An expected weakening of fiscal conditions in Sri Lanka poses a risk to the government's credit standing in the near term. In mid-January this year, we revised the outlook on Sri Lanka to reflect this risk (see "Sri Lanka Outlook Revised To Negative On Fiscal Deterioration; Ratings Affirmed At 'B/B'," published Jan. 14, 2020). The pressure on the budget came following the tax cuts implemented by the new Sri Lankan president soon after he came into office. Without offsetting policy measures in the next year or so, we could see a material weakening of the government's structural fiscal performance that will weigh on its credit standing.

Uncertain global environment reduces the chances of tightening monetary conditions

Although global economic prospects are unlikely to lift credit metrics in the Asia-Pacific in 2020, they also bring some stability to international funding conditions. Given current modest growth forecasts, few expect the major developed markets' central banks to tighten monetary policy significantly this year. Capital-importing economies in the Asia-Pacific are unlikely to face capital outflows unless a geopolitical event breaks out. Emerging market sovereigns dependent on foreign financing are also less likely to see a surge in financing costs.

Table 2

Asia-Pacific Economic Outlook
Real GDP growth (%) GG balance / GDP (%) Net GG debt / GDP (%) Current account balance / GDP (%) Narrow net ext. debt / CAR (%)
2019 2020 2019 2020 2019 2020 2019 2020 2019 2020
Australia 2.0 2.1 (0.3) (0.1) 16.8 16.6 (0.7) 0.0 243.9 228.5
Bangladesh 8.1 7.0 (4.1) (4.2) 25.2 26.4 (1.8) (1.6) 38.8 42.9
China 6.2 5.7 (3.0) (2.7) 52.8 53.5 0.3 0.1 (69.1) (63.3)
Cook Islands 3.0 0.5 (1.9) (0.2) (3.6) (6.3) 15.9 15.4 (22.2) (21.3)
Fiji 2.7 3.0 (3.2) (2.9) 41.5 41.7 (6.0) (5.3) 14.1 13.1
Hong Kong (1.4) 0.2 (2.0) (2.2) (32.7) (30.2) 4.5 4.0 (55.8) (54.8)
India 5.1 6.5 (7.4) (7.1) 70.5 69.8 (2.1) (2.1) 11.9 10.9
Indonesia 5.0 5.1 (2.1) (2.1) 27.7 27.3 (2.8) (2.8) 103.1 99.6
Japan 0.5 0.4 (2.8) (2.8) 150.0 151.3 3.4 3.3 (76.9) (69.7)
Korea (the Republic of) 1.9 2.1 0.5 0.3 5.8 6.2 3.0 3.2 (48.9) (49.4)
Malaysia 4.6 4.5 (3.4) (3.2) 58.0 57.1 1.9 1.6 25.3 23.7
Mongolia 6.3 5.8 1.5 (1.2) 66.4 61.5 (15.0) (14.2) 185.6 184.3
New Zealand 2.4 2.2 (0.3) (2.1) 17.9 19.2 (3.4) (3.7) 163.2 176.7
Pakistan 3.3 2.4 (8.9) (7.1) 76.5 78.7 (4.9) (4.4) 163.4 187.4
Papua New Guinea 3.8 3.1 (2.2) (1.7) 29.1 30.0 21.1 19.6 112.0 98.0
Philippines 6.0 6.2 (1.8) (2.4) 28.4 28.1 (2.2) (2.4) (16.0) (10.5)
Singapore 0.7 1.4 3.0 3.0 (42.7) (32.3) 15.6 15.0 (61.1) (54.2)
Sri Lanka 2.7 4.0 (5.8) (6.1) 83.0 83.1 (2.8) (3.0) 151.1 148.4
Taiwan 2.5 2.4 (0.5) (0.7) 33.1 32.5 10.7 10.1 (108.1) (105.1)
Thailand 2.6 2.9 (1.0) (1.6) 24.1 25.8 6.3 4.9 (26.2) (26.5)
Vietnam 7.0 6.7 (4.6) (4.4) 43.2 44.0 2.1 2.2 22.5 15.8

Sovereign Summaries

Australia (AAA/Stable/A-1+)

Unsolicited rating

  • Analyst: Anthony.walker@spglobal.com
  • Latest published summary: Australia (April 5, 2019)
Ratings score snapshot
  • Institutional assessment: 1
  • Economic assessment: 1
  • External assessment: 6
  • Fiscal assessment, flexibility and performance: 1
  • Fiscal assessment, debt burden: 1
  • Monetary assessment: 1
Outlook: Stable

The stable outlook on Australia reflects our expectation that the general government fiscal balance will return to surplus by the early 2020s. We expect steady government revenue growth--supported by the strong labor market and relatively robust commodity prices--to be accompanied by expenditure restraint. We also expect property prices to continue their orderly unwind, and that this slowdown won't weigh heavily on consumer spending and the financial system's asset quality.

We could lower our ratings if we consider that it is unlikely for the general government balance to return to surplus over the next few years. Australia's weak external position means that its other credit factors, including fiscal factors, need to be strong to keep the sovereign rating at the highest level on our scale. A stronger fiscal position would also be a strong buffer to absorb the consequences of an abrupt weakening of the housing market and the vulnerabilities that such an event could bring to financial stability. While our base case is for a soft landing, our ratings could come under pressure if house prices fall sharply and increase risks to fiscal accounts, real economic growth, and financial sector stability.

(Originally published on April 5, 2019)

Table 3

Australia
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 62.6 56.7 50.0 54.1 57.4 54.8 54.1 54.6 55.2
GDP growth 2.5 2.2 2.8 2.4 2.9 2.0 2.1 2.3 2.3
GDP per capita growth 1.0 0.7 1.2 0.7 1.4 0.3 0.5 0.8 0.8
Current account balance/GDP (3.1) (3.7) (4.7) (2.2) (2.8) (0.7) 0.0 0.1 (0.1)
Gross external financing needs/CAR&FXR 229.7 254.2 276.8 253.3 232.6 222.5 213.9 208.2 205.0
Narrow net external debt/CAR 265.3 266.5 318.1 270.1 255.7 243.9 228.5 218.1 207.9
GG balance/GDP (3.0) (2.2) (2.4) (2.1) (1.1) (0.3) (0.1) 0.3 0.6
GG net debt/GDP 12.4 13.6 15.7 15.9 17.2 16.8 16.6 16.4 15.7
CPI inflation 2.7 1.7 1.4 1.7 1.9 1.6 1.8 2.0 2.2
Bank credit to resident private sector/GDP 153.6 163.9 174.8 170.7 168.5 166.3 162.6 162.3 161.8
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Bangladesh (BB-/Stable/B)

  • Analyst: yeefarn.phua@spglobal.com
  • Latest published research update: Bangladesh 'BB-/B' Ratings Affirmed; Outlook Stable (May 30, 2019)
Ratings score snapshot
  • Institutional assessment: 5
  • Economic assessment: 4
  • External assessment: 2
  • Fiscal assessment, flexibility and performance: 6
  • Fiscal assessment, debt burden: 4
  • Monetary assessment: 4
Outlook: Stable

The stable outlook reflects our expectation that Bangladesh's solid growth path will continue raising average income and prevail over risks to external metrics over the next 12 months.

We may raise the ratings if the government implements fiscal measures that strengthen future fiscal performances.

We may lower the ratings if fiscal or external metrics weaken materially from current levels. This could happen if persistent fiscal slippages cause net general government debt to rise to, and is sustained at, levels above 30% of GDP. We may also lower the ratings if the external profile worsens materially, possibly due to significantly weakened export demand.

(Originally published May 30, 2019)

Table 4

Bangladesh
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 1.1 1.2 1.4 1.5 1.6 1.8 2.0 2.2 2.4
GDP growth 6.1 6.6 7.1 7.3 7.9 8.1 7.0 7.0 7.0
GDP per capita growth 4.8 5.4 6.0 6.2 6.6 6.9 5.8 5.8 5.8
Current account balance/GDP 0.8 1.5 1.9 (0.5) (3.6) (1.8) (1.6) (1.5) (1.4)
Gross external financing needs/CAR&FXR 76.6 75.0 70.8 74.7 85.1 85.8 87.5 91.3 93.4
Narrow net external debt/CAR 22.7 13.6 12.0 17.4 33.5 38.8 42.9 46.4 49.1
GG balance/GDP (3.1) (3.4) (3.7) (4.5) (5.6) (4.1) (4.2) (4.2) (4.2)
GG net debt/GDP 24.1 22.9 23.1 23.2 23.8 25.2 26.4 27.5 28.5
CPI inflation 7.0 6.2 5.5 5.7 5.5 5.5 6.0 6.0 6.0
Bank credit to resident private sector/GDP 45.2 45.7 46.6 48.8 48.5 48.6 48.4 48.2 48.0
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

China (A+/Stable/A-1)

  • Analyst: kimeng.tan@spglobal.com
  • Latest published research update: China Rating Affirmed At 'A+/A-1'; Outlook Stable (Sept. 30, 2019 )
Ratings score snapshot
  • Institutional assessment: 3
  • Economic assessment: 3
  • External assessment: 1
  • Fiscal assessment, flexibility and performance: 4
  • Fiscal assessment, debt burden: 2
  • Monetary assessment: 3
Outlook: Stable

The stable outlook reflects our view that China will maintain above-average headline GDP growth and see improved fiscal performance over the next three to four years. We expect per capita real GDP growth to stay above 5% annually, even as public investment growth slows further. In addition, we anticipate the stricter implementation of restrictions on the off-budget borrowings of subnational government to lead to a declining trend in fiscal deficits, as measured by changes in net general government debt in terms of GDP.

We may raise our ratings on China if credit growth slows further and is sustained below nominal income growth even as structural reforms help to maintain healthy real GDP growth. Fiscal support should also improve if general government deficits are lower than we currently expect. In this scenario, we believe risks to financial stability and medium-term growth prospects will lessen.

A downgrade could ensue if we see a higher likelihood that China will ease its efforts to stem rising financial risk and allow higher credit growth to support economic expansion in an unsustainable manner. We expect such a trend would weaken the Chinese economy's resilience to shocks, limit the government's policy options, and increase the likelihood of a sharper decline in the trend GDP growth rate.

(Originally published on Sept. 30, 2019)

Table 5

China
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 7.6 8.0 8.1 8.7 9.8 10.0 10.4 11.2 11.9
GDP growth 7.3 6.9 6.7 6.9 6.6 6.2 5.7 5.6 5.4
GDP per capita growth 6.7 6.4 6.1 6.3 6.2 5.7 5.3 5.2 5.1
Current account balance/GDP 2.3 2.8 1.8 1.6 0.4 0.3 0.1 (0.1) (0.3)
Gross external financing needs/CAR&FXR 52.9 55.8 53.5 59.6 66.5 69.7 70.6 72.9 75.3
Narrow net external debt/CAR (99.1) (101.7) (97.8) (83.8) (71.4) (69.1) (63.3) (56.6) (50.4)
GG balance/GDP (0.6) (2.3) (2.8) (2.4) (2.8) (3) (2.7) (2.5) (2.3)
GG net debt/GDP 11.8 62.0 58.4 50.8 52.5 52.8 53.5 52.8 52.4
CPI inflation 2.0 1.4 2.0 1.6 2.1 2.5 2.3 2.2 2.1
Bank credit to resident private sector/GDP 158.1 168.7 183.9 182.6 189.9 192.5 195.5 194.7 196.6
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Cook Islands (B+/Stable/B)

  • Analyst: rebecca.hrvatin@spglobal.com
  • Latest published research update: Cook Islands 'B+/B' Ratings Affirmed; Outlook Stable (Feb. 28, 2019)
Ratings score snapshot
  • Institutional assessment: 5
  • Economic assessment: 4
  • External assessment: 5
  • Fiscal assessment, flexibility and performance: 2
  • Fiscal assessment, debt burden: 1
  • Monetary assessment: 6
Outlook: Stable

The stable outlook reflects our expectation that strong tourism will continue to support the economy, debt levels will remain low, and Cook Islands' enduring relationship with New Zealand will offset weak political and institutional settings as well as data deficiencies.

We could raise the rating over the next 12-18 months if there is an important improvement in data disclosure and quality, leading to increased transparency and timeliness of the external, economic and fiscal accounts.

The rating could come under downward pressure over the same period if the tourism sector substantially weakens, or if the government's commitment to uphold past fiscal gains through changes to economic or fiscal policies weakens. These scenarios would result in worse fiscal balances, and debt rising significantly more than we currently expect.

(Originally published Feb. 28, 2019)

Table 6

Cook Islands
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 23.2 23.7 23.5 26.7 31.0 31.7 33.4 34.7 36.5
GDP growth 4.5 4.8 5.5 6.8 8.9 3.0 0.5 0.5 0.5
GDP per capita growth 8.3 9.6 9.8 9.5 11.7 5.6 3.1 3.1 3.1
Current account balance/GDP 34.9 22.7 36.3 16.7 15.9 15.9 15.4 15.3 15.0
Gross external financing needs/CAR&FXR N/A N/A N/A N/A N/A N/A N/A N/A N/A
Narrow net external debt/CAR 5.3 (4.5) (10.3) (20.4) (23.9) (22.2) (21.3) (19.8) (18.5)
GG balance/GDP (4.3) (4.6) (1.7) 6.8 4.0 (1.9) (0.2) (0.2) (0.2)
GG net debt/GDP 13.7 12.7 7.5 (0.3) (6.8) (3.6) (6.3) (9.6) (14.1)
CPI inflation 1.5 5.3 (0.1) (0.1) 0.4 0.9 1.3 1.4 1.4
Bank credit to resident private sector/GDP 64.5 61.7 52.3 50.2 44.8 42.6 41.1 40.2 39.3
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Fiji (BB-/Stable/B)

  • Analyst: martin.foo@spglobal.com
  • Latest published research update: Fiji Ratings Raised To 'BB-' On Policy Continuity And Fiscal Consolidation Plans; Outlook Stable (Aug. 22, 2019)
Ratings score snapshot
  • Institutional assessment: 5
  • Economic assessment: 4
  • External assessment: 3
  • Fiscal assessment, flexibility and performance: 4
  • Fiscal assessment, debt burden: 3
  • Monetary assessment: 5
Outlook: Stable

The stable outlook reflects our expectation that Fiji's economy will continue to grow during the next 12 months, and that the government's medium-term fiscal consolidation plan will result in a stabilizing debt burden. We also expect the country's external position and foreign-exchange reserves to remain sound.

We could lower our ratings within the next 12 months if we observe a reversal of recent improvements in political stability, resulting in a decline in investor confidence or the withdrawal of donor and multilateral support. We might also lower the ratings if the government's fiscal position were to weaken, leading to a substantial rise in interest expenses and net debt.

We could raise our ratings within the next 12 months if Fiji's institutional settings continue to improve, which would help to support policy stability and economic growth. We might also raise the ratings if the government loosens its foreign-exchange restrictions while maintaining a healthy level of reserves or if fiscal consolidation progresses faster than we currently expect, resulting in a declining debt burden.

(Originally published Aug. 22, 2019)

Table 7

Fiji
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 5.6 5.4 5.7 6.1 6.2 6.4 6.7 7.1 7.5
GDP growth 5.6 4.7 2.5 5.4 3.5 2.7 3.0 3.0 3.0
GDP per capita growth 5.1 4.2 2.1 3.8 2.9 2.1 2.4 2.4 2.4
Current account balance/GDP (5.8) (3.5) (3.7) (6.7) (8.5) (6.0) (5.3) (5.1) (4.6)
Gross external financing needs/CAR&FXR 94.0 90.8 93.1 96.9 97.1 96.7 96.6 96.6 96.2
Narrow net external debt/CAR 16.5 18.7 13.6 14.6 15.8 14.1 13.1 12.4 11.2
GG balance/GDP (4.0) (3.8) (1.3) (1.9) (4.3) (3.2) (2.9) (2.5) (2.5)
GG net debt/GDP 40.1 41.2 39.2 36.3 40.6 41.5 41.7 41.5 41.1
CPI inflation 0.5 1.4 3.9 3.4 4.1 3.5 3.0 3.0 3.0
Bank credit to resident private sector/GDP 62.2 66.0 69.3 70.3 71.7 71.8 71.7 71.6 71.4
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Hong Kong (AA+/Stable/A-1+)

  • Analyst: rain.yin@spglobal.com
  • Latest published summary: Hong Kong 'AA+/A-1+' Ratings Affirmed; Outlook Stable (Oct. 8, 2019)
Ratings score snapshot
  • Institutional assessment: 3
  • Economic assessment: 1
  • External assessment: 1
  • Fiscal assessment, flexibility and performance: 1
  • Fiscal assessment, debt burden: 2
  • Monetary assessment: 2
Outlook: Stable

The stable outlook on Hong Kong's long-term issuer rating reflects our expectation that the SAR's strong economic and financial metrics will allow the government's credit standing to withstand the fallout from the ongoing social unrest in the next two to three years. During this period, we expect muted economic growth, as business investment is weighed down by U.S.-China trade tensions, while tourism, retail sales, and consumption are crimped by social unrest. The stable outlook also reflects our expectation that the institutional arrangements between Hong Kong and the China central government continue under the "one country, two systems" framework, as outlined in the Basic Law.

The ratings on Hong Kong could weaken if continuing social tensions result in abrupt changes in the relations between the central government of China and the SAR government. This could reduce policy predictability in Hong Kong and undermine confidence in the autonomy of the SAR government. We could also lower the ratings on Hong Kong if a prolonged economic slowdown results in much weaker external and fiscal profiles than what we are currently projecting.

The ratings on Hong Kong could strengthen if the policy environment improves materially as social stability is restored and the central government's credit standing improves.

(Originally published Oct. 8, 2019)

Table 8

Hong Kong
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 40.3 42.4 43.7 46.2 48.7 48.9 49.2 50.3 51.5
GDP growth 2.8 2.4 2.2 3.9 3.0 (1.4) 0.2 2.1 2.0
GDP per capita growth 2.0 1.5 1.6 3.1 2.2 (2.4) (0.6) 1.4 1.3
Current account balance/GDP 1.4 3.3 4.0 4.7 4.3 4.5 4.0 3.9 3.7
Gross external financing needs/CAR&FXR 177.6 184.8 182.9 175.1 177.5 187.1 190.6 191.5 196.1
Narrow net external debt/CAR (57.0) (59.7) (69.9) (65.5) (59.3) (55.8) (54.8) (53.6) (51.3)
GG balance/GDP 3.2 0.6 4.5 5.6 2.4 (2) (2.2) (1.5) (1)
GG net debt/GDP (30.2) (30.1) (31.9) (36.0) (35.2) (32.7) (30.2) (27.8) (26.0)
CPI inflation 4.4 3.0 2.4 1.5 2.4 2.9 1.9 1.8 2.0
Bank credit to resident private sector/GDP 213.2 210.4 218.9 237.3 232.1 238.0 245.3 250.1 254.6
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

India (BBB-/Stable/A-3)

Unsolicited rating

  • Analyst: Andrew.Wood@spglobal.com
  • Latest published summary: India (Dec. 3, 2019)
Ratings score snapshot
  • Institutional assessment: 3
  • Economic assessment: 4
  • External assessment: 2
  • Fiscal assessment, budget performance: 6
  • Fiscal assessment, debt burden: 6
  • Monetary assessment: 3
Outlook: Stable

The stable outlook reflects our expectations that, over the next two years, growth will remain strong, India will maintain its sound net external position, and fiscal deficits will remain elevated but broadly in line with our forecasts.

Upward pressure on the ratings could build if the government significantly curtails its fiscal deficits and the associated change in its net indebtedness at the general government level. Upward pressure could also build if India's external accounts strengthen substantially.

Downward pressure on the ratings could emerge if GDP growth falls well below our forecasts, causing us to reassess our view of trend growth; if net general government deficits rise significantly from their current elevated levels; or if political developments materially undermine economic reform momentum.

(Originally published Dec. 3, 2019)

Table 9

India
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 1.6 1.6 1.7 2.0 2.0 2.1 2.3 2.5 2.8
GDP growth 7.4 8.0 8.2 7.2 6.8 5.1 6.5 7.0 7.4
GDP per capita growth 6.1 6.7 6.9 6.0 5.7 4.1 5.5 6.0 6.4
Current account balance/GDP (1.3) (1.1) (0.6) (1.8) (2.1) (2.1) (2.1) (2.0) (2.0)
Gross external financing needs/CAR&FXR 92.6 88.9 87.5 90.3 89.4 91.9 92.5 92.6 93.4
Narrow net external debt/CAR 16.1 16.1 10.6 9.5 11.2 11.9 10.9 10.8 11.0
GG balance/GDP (7.2) (7.4) (7.4) (7.4) (6.5) (7.4) (7.1) (6.8) (6.7)
GG net debt/GDP 66.5 68.5 67.6 68.1 68.1 70.5 69.8 69.2 68.6
CPI inflation 6.0 4.9 4.5 3.6 3.4 3.6 4.1 4.2 4.4
Bank credit to resident private sector/GDP 53.7 53.9 52.1 51.4 52.4 54.7 55.5 56.1 56.7
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Indonesia (BBB/Stable/A-2)

  • Analyst: andrew.wood@spglobal.com
  • Latest published research update: Indonesia Rating Raised To 'BBB' On Strong Growth prospects; Outlook Stable (May 31, 2019)
Ratings score snapshot
  • Institutional assessment: 3
  • Economic assessment: 4
  • External assessment: 3
  • Fiscal assessment, budget performance: 3
  • Fiscal assessment, debt burden: 2
  • Monetary assessment: 3
Outlook: Stable

The stable outlook reflects our view that the constructive policy environment in Indonesia will support its growth prospects over the coming years, enhancing the sovereign's broader credit profile.

We may raise the long-term rating if Indonesia's external settings improve materially from their current levels, or if its fiscal settings improve such that the general government deficit and associated change in net debt fall well below 1.0% of GDP over the next two years.

Conversely, we may lower the rating if economic growth slows substantially over the next two years, or if we observe notable weakening of Indonesia's external or fiscal positions. Indications of pressure on the rating are net general government debt and budget deficit surpassing 30% and 3% of GDP, respectively, in a sustained way, or interest costs exceeding 10% of government revenue. Indications of Indonesia's external settings weakening are liquidity (gross financing requirements as a percentage of current account receipts [CAR] and foreign exchange reserves) consistently exceeding 100%, and narrow net external debt above 100% of CAR. Such a deterioration could occur if Indonesia's terms of trade continue to worsen without a concurrent compression of import volumes, and real export growth materially underperforms our expectations.

(Originally published May 31, 2019)

Table 10

Indonesia
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 3.5 3.3 3.6 3.9 3.9 4.2 4.5 4.7 5.0
GDP growth 5.0 4.9 5.0 5.1 5.2 5.0 5.1 5.1 5.1
GDP per capita growth 3.7 3.7 3.9 3.9 4.0 3.8 4.0 4.0 4.1
Current account balance/GDP (3.1) (2.0) (1.8) (1.6) (2.9) (2.8) (2.8) (2.7) (2.6)
Gross external financing needs/CAR&FXR 99.8 93.8 94.2 92.1 95.8 100.0 99.3 97.8 95.8
Narrow net external debt/CAR 81.6 104.3 100.0 94.0 98.4 103.1 99.6 95.5 91.4
GG balance/GDP (2.2) (2.6) (2.5) (2.5) (1.7) (2.1) (2.1) (1.9) (1.9)
GG net debt/GDP 22.9 25.2 26.2 26.3 27.3 27.7 27.3 27.1 26.7
CPI inflation 8.4 3.4 3.0 3.6 3.1 3.1 3.6 3.8 3.9
Bank credit to resident private sector/GDP 37.3 37.3 37.9 37.4 38.5 39.2 39.4 39.9 40.3
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Japan (A+/Positive/A-1)

Unsolicited rating

  • Analyst: kimeng.tan@spglobal.com
  • Latest published summary: Japan (April 30, 2019)
Ratings score snapshot
  • Institutional assessment: 2
  • Economic assessment: 1
  • External assessment: 1
  • Fiscal assessment, budget performance: 5
  • Fiscal assessment, debt burden: 6
  • Monetary assessment: 2
Outlook: Positive

The positive outlook on the long-term sovereign credit rating on Japan reflects our view that nominal economic growth exceeding 2%, alongside negative effective real interest rates, would allow the sovereign's relative debt burden to stabilize sooner than we had previously expected. We may revise the outlook to stable if our expectations of economic performance in the next two to three years are materially weaker than our current projections and cause the process of fiscal repair to slow significantly or stagnate.

(Originally published April 30, 2019)

Table 11

Japan
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 38.5 34.7 38.9 38.6 39.5 40.7 42.0 43.4 45.2
GDP growth (0.4) 1.3 0.9 1.9 0.7 0.5 0.4 0.8 1.2
GDP per capita growth (0.2) 1.3 1.1 2.1 0.9 0.8 0.7 1.1 1.6
Current account balance/GDP 0.8 3.1 4.0 4.1 3.5 3.4 3.3 3.3 3.7
Gross external financing needs/CAR&FXR 146.3 157.1 158.0 172.2 168.7 180.2 182.2 182.1 181.0
Narrow net external debt/CAR (140.3) (134.3) (121.8) (108.1) (80.4) (76.9) (69.7) (63.1) (58.3)
GG balance/GDP (4.9) (3.3) (3.4) (2.7) (2.7) (2.8) (2.8) (2.7) (2.5)
GG net debt/GDP 147.6 145.9 147.6 147.0 149.1 150.0 151.3 152.0 150.8
CPI inflation 2.7 0.8 (0.1) 0.5 0.9 0.6 1.3 0.9 0.9
Bank credit to resident private sector/GDP 141.2 141.0 143.9 147.2 149.1 150.2 151.6 152.7 151.9
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Korea, Republic of (AA/Stable/A-1+)

  • Analyst: yeefarn.phua@spglobal.com
  • Latest published research update: South Korea 'AA/A-1+' Ratings Affirmed; Outlook Stable (Nov. 6, 2019)
Ratings score snapshot
  • Institutional assessment: 3
  • Economic assessment: 1
  • External assessment: 1
  • Fiscal assessment, flexibility and performance: 1
  • Fiscal assessment, debt burden: 4
  • Monetary assessment: 2
Outlook: Stable

The stable outlook reflects our expectation that geopolitical risks in the Korean peninsula will not escalate to the point of hurting Korea's economic fundamentals over the next two years. Beyond the outlook horizon, Korea's economic growth rate could decline toward the average level among its rating peers, as the country becomes wealthier and its labor force ages. We expect broad continuity in economic policies over the coming two years.

We may raise the sovereign ratings if the security risks and contingent liability risks posed by North Korea recede.

We would lower the ratings if geopolitical tensions related to North Korea intensify to a point that they negatively affect Korea's economic, fiscal, or external performance.

(Originally published Nov. 6, 2019)

Table 12

Korea
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 29.3 28.7 29.3 31.6 33.3 32.0 33.1 34.8 36.7
GDP growth 3.2 2.8 3.0 3.2 2.7 1.9 2.1 2.3 2.4
GDP per capita growth 2.6 2.3 2.5 2.9 2.2 1.8 2.0 2.2 2.4
Current account balance/GDP 5.6 7.2 6.5 4.6 4.4 3.0 3.2 3.4 3.6
Gross external financing needs/CAR&FXR 75.3 70.2 67.7 71.1 72.5 74.0 73.0 72.1 72.1
Narrow net external debt/CAR (21.2) (33.8) (46.5) (49.0) (44.5) (48.9) (49.4) (48.0) (44.4)
GG balance/GDP 0.7 0.7 1.6 1.4 0.9 0.5 0.3 0.3 0.3
GG net debt/GDP 8.3 9.2 9.2 6.5 6.4 5.8 6.2 6.6 7.0
CPI inflation 1.3 0.7 1.0 1.9 1.5 0.3 0.9 1.4 1.6
Bank credit to resident private sector/GDP 149.1 147.8 147.6 147.5 152.0 156.5 157.8 158.5 158.8
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Malaysia (A-/Stable/A-2)

  • Analyst: andrew.wood@spglobal.com
  • Latest published summary: Malaysia (July 3, 2019)
Ratings score snapshot
  • Institutional assessment: 3
  • Economic assessment: 4
  • External assessment: 2
  • Fiscal assessment, budget performance: 3
  • Fiscal assessment, debt burden: 4
  • Monetary assessment: 2
Outlook: Stable

The stable outlook reflects our expectation that Malaysia's strong external position, monetary flexibility, and well-established institutions will remain in place over the next two years.

We may raise the sovereign credit ratings over the next 24 months if the economy grows considerably faster than forecast, and in turn produces a fiscal performance that's better than we expected, reducing debt levels further than anticipated.

On the other hand, our ratings on Malaysia could face downward pressure if economic growth underperforms expectations, or we assess a weaker commitment to fiscal consolidation, either of which could in turn hurt the government debt standing. Indications of downward pressure on the ratings are net general government debt and the annual change in net general government debt surpassing 60% and 4%, respectively, in a sustained way, or interest paid by the general government exceeding 15% of revenue.

(Originally published July 3, 2019)

Table 13

Malaysia
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 11.2 9.7 9.5 10.0 11.1 11.3 11.8 12.4 13.1
GDP growth 6.0 5.1 4.5 5.7 4.7 4.6 4.5 4.6 4.6
GDP per capita growth 4.3 3.5 3.0 4.5 3.6 4.0 3.2 3.3 3.4
Current account balance/GDP 4.3 3.0 2.4 2.8 2.1 1.9 1.6 1.6 1.7
Gross external financing needs/CAR&FXR 85.9 86.3 94.2 95.0 94.9 97.1 97.0 95.9 94.8
Narrow net external debt/CAR 14.4 21.1 28.9 25.5 25.3 25.3 23.7 21.5 19.5
GG balance/GDP (3.0) (2.9) (3.0) (2.9) (3.8) (3.4) (3.2) (3) (2.8)
GG net debt/GDP 46.5 48.6 47.3 55.1 54.0 58.0 57.1 56.2 55.4
CPI inflation 3.1 2.1 2.1 3.9 0.9 0.7 1.4 1.5 1.8
Bank credit to resident private sector/GDP 128.5 132.8 132.4 127.3 131.2 133.3 132.7 132.2 132.7
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Mongolia (B/Stable/B)

  • Analyst: andrew.wood@spglobal.com
  • Latest published research update: Mongolia 'B' Rating Affirmed; Outlook Stable (Nov. 28, 2019)
Ratings score snapshot
  • Institutional assessment: 5
  • Economic assessment: 4
  • External assessment: 6
  • Fiscal assessment, budget performance: 4
  • Fiscal assessment, debt burden: 6
  • Monetary assessment: 4
Outlook: Stable

The stable outlook balances our expectation that Mongolia's strong macroeconomic outlook fuels continued, yet gradual, improvement in its external and debt settings over the next 12 months while the government continues to pursue prudent economic and fiscal policies.

Upside pressure on the rating could build if the economy outperforms our current projections over the next 12 months such that fiscal, debt, or external metrics improve more rapidly than we expect.

Downward pressure could emerge if Mongolia's macroeconomic settings weaken, potentially owing to an unexpected acute downturn in commodities markets, such that we assess external and debt pressures to have materially deteriorated. Likewise, a backslide in the government's fiscal consolidation program, potentially associated with rising political uncertainty around general elections in 2020, could also lead to downward pressure on the rating.

(Originally published Nov. 28, 2019)

Table 14

Mongolia
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 4.1 3.8 3.6 3.6 4.0 4.1 4.4 4.7 5.1
GDP growth 8.1 2.5 1.4 5.4 6.8 6.3 5.8 5.8 6.0
GDP per capita growth 5.7 0.5 (0.6) 3.5 4.8 4.4 3.9 3.9 4.1
Current account balance/GDP (15.8) (8.1) (6.3) (10.1) (16.9) (15.0) (14.2) (12.0) (9.5)
Gross external financing needs/CAR&FXR 132.8 140.7 146.2 149.4 130.0 132.0 122.5 119.0 115.5
Narrow net external debt/CAR 136.1 178.2 252.1 224.8 189.3 185.6 184.3 177.9 167.7
GG balance/GDP (11.3) (8.5) (15.3) (3.8) 2.6 1.5 (1.2) (2.3) (2.3)
GG net debt/GDP 57.8 66.7 94.1 85.5 74.9 66.4 61.5 58.1 54.7
CPI inflation 12.2 6.6 1.1 4.1 6.8 7.0 7.1 7.2 7.2
Bank credit to resident private sector/GDP 59.4 55.6 56.4 55.0 57.4 57.0 56.1 55.6 54.7
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

New Zealand (AA/Positive/A-1+)

  • Analyst: anthony.walker@spglobal.com
  • Latest published research update: New Zealand Outlook Revised To Positive On Improving Fiscal Position; 'AA+' LC And 'AA' FC Ratings Affirmed (Jan. 31, 2019)
Ratings score snapshot
  • Institutional assessment: 1
  • Economic assessment: 1
  • External assessment: 6
  • Fiscal assessment, budget performance: 2
  • Fiscal assessment, debt burden: 1
  • Monetary assessment: 1
Outlook: Positive

The positive outlook on the long-term ratings on New Zealand reflects our view that the general government budget could achieve a surplus in the early 2020s. This would reduce net general government debt and provide additional resilience to macroeconomic or financial sector risks that could arise due to high levels of external and domestic leverage.

We could revise the outlook to stable within the next two years if the general government budget does not achieve surplus in the early 2020s. This scenario would weaken its debt profile through debt levels and interest expenses that are higher than our expectations, reducing its headroom to address potential macroeconomic and financial sector risks, should they materialize.

(Originally published Jan. 31, 2019)

Table 15

New Zealand
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 43.9 41.6 37.0 41.2 43.0 41.1 40.3 41.1 42.2
GDP growth 2.7 4.0 3.6 3.4 3.2 2.4 2.2 2.4 2.5
GDP per capita growth 1.6 2.2 1.7 1.4 1.5 0.8 0.8 1.0 1.2
Current account balance/GDP (2.4) (3.3) (2.1) (2.5) (3.2) (3.4) (3.7) (3.7) (3.8)
Gross external financing needs/CAR&FXR 194.3 207.1 200.2 201.6 194.8 189.1 197.6 204.1 201.2
Narrow net external debt/CAR 184.9 164.7 189.5 182.3 160.0 163.2 176.7 171.2 166.3
GG balance/GDP (2.1) (1.0) (0.7) 0.8 0.4 (0.3) (2.1) (2.9) (2.0)
GG net debt/GDP 20.4 20.2 20.0 18.7 18.2 17.9 19.2 21.3 22.4
CPI inflation 1.5 0.6 0.3 1.4 1.5 1.7 1.9 1.8 1.9
Bank credit to resident private sector/GDP 152.9 156.4 159.6 161.3 160.4 163.1 165.5 167.9 169.5
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Pakistan (B-/Stable/B)

  • Analyst: andrew.wood@spglobal.com
  • Latest published research update: Pakistan Ratings Affirmed At 'B-/B'; Outlook Stable (Aug. 29, 2019)
Ratings score snapshot
  • Institutional assessment: 6
  • Economic assessment: 5
  • External assessment: 6
  • Fiscal assessment, budget performance: 6
  • Fiscal assessment, debt burden: 6
  • Monetary assessment: 4
Outlook: Stable

The stable outlook reflects our expectations that donor and partner financing will ensure that Pakistan is able to meet its external obligations over the next 12 months, and that external, fiscal, and economic metrics will not deteriorate materially beyond our current projections.

We may lower our ratings if Pakistan's fiscal, economic, or external indicators continue to deteriorate, such that the government's external debt repayments come under pressure. Indications of this would include GDP growth below our forecast, or external or fiscal imbalances higher than what we expect.

Conversely, we may raise our ratings on Pakistan if the economy materially outperforms our expectations, strengthening the country's fiscal and external positions more quickly than forecast.

(Originally published Aug. 29, 2019)

Table 16

Pakistan
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 1.3 1.4 1.4 1.6 1.6 1.4 1.2 1.3 1.3
GDP growth 4.1 4.1 4.6 5.2 5.5 3.3 2.4 3.0 3.4
GDP per capita growth 2.4 1.9 2.4 3.6 3.4 1.3 0.4 1.0 1.4
Current account balance/GDP (1.3) (1.0) (1.8) (4.1) (6.3) (4.9) (4.4) (3.6) (3.0)
Gross external financing needs/CAR&FXR 113.1 108.2 105.8 113.2 132.9 148.8 157.5 151.5 144.8
Narrow net external debt/CAR 92.6 82.9 92.7 111.9 140.1 163.4 187.4 191.6 195.2
GG balance/GDP (5.5) (5.3) (4.6) (5.8) (6.5) (8.9) (7.1) (5.5) (5)
GG net debt/GDP 57.0 56.5 59.0 59.4 64.1 76.5 78.7 79.5 79.6
CPI inflation 8.6 4.5 2.9 4.2 3.9 7.3 8.0 5.0 5.0
Bank credit to resident private sector/GDP 17.2 17.0 18.1 19.6 21.2 21.6 22.7 24.0 25.3
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Papua New Guinea (B/Stable/B)

  • Analyst: rebecca.hrvatin@spglobal.com
  • Latest published research update: Papua New Guinea 'B/B' Ratings Affirmed; Outlook Stable (April 23, 2019)
Ratings score snapshot
  • Institutional assessment: 5
  • Economic assessment: 6
  • External assessment: 6
  • Fiscal assessment, budget performance: 4
  • Fiscal assessment, debt burden: 5
  • Monetary assessment: 5
Outlook: Stable

The stable outlook balances our view that PNG will remain a low-income economy with weak institutions and limited monetary flexibility, with our expectation that fiscal and external imbalances will continue to improve during the next 12 months.

Upside pressure on the rating could build if the economy were to significantly outperform our current projections or if fiscal and debt metrics improve more rapidly than we expect.

Downward pressure could emerge if PNG's fiscal deficits weaken during the coming year. For example, this could happen if export revenues are lower than we expected, leading to diminished resource related dividends and tax collection or if there were an unexpected rapid increase in government spending without commensurate growth in revenues.

(Originally published April 23, 2019)

Table 17

Papua New Guinea
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 3.0 2.7 2.6 2.7 2.8 2.8 2.8 2.8 3.0
GDP growth 13.6 9.5 4.1 2.7 0.0 3.8 3.1 3.7 5.0
GDP per capita growth 11.2 7.2 2.0 0.6 (2.1) 1.7 1.0 1.6 2.8
Current account balance/GDP 1.3 11.2 21.8 21.7 20.8 21.1 19.6 13.3 5.2
Gross external financing needs/CAR&FXR 80.9 97.1 76.5 97.7 81.4 83.3 74.5 77.8 102.3
Narrow net external debt/CAR 212.4 231.9 188.5 151.5 125.9 112.0 98.0 129.3 155.4
GG balance/GDP (6.3) (4.6) (4.7) (2.5) (3.9) (2.2) (1.7) (1.2) (0.9)
GG net debt/GDP 18.1 24.5 29.5 30.0 28.4 29.1 30.0 29.8 28.8
CPI inflation 5.2 6.0 6.7 5.4 4.8 4.7 4.7 4.7 4.7
Bank credit to resident private sector/GDP 20.5 21.7 21.3 19.3 18.9 16.4 16.4 16.3 15.6
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Philippines (BBB+/Stable/A-2)

  • Analyst: andrew.wood@spglobal.com
  • Latest published research update: Philippines Long-Term Rating Raised To 'BBB+' On Strong Growth Trajectory; Outlook Stable (April 30, 2019)
Ratings score snapshot
  • Institutional assessment: 4
  • Economic assessment: 4
  • External assessment: 1
  • Fiscal assessment, budget performance: 3
  • Fiscal assessment, debt burden: 2
  • Monetary assessment: 3
Outlook: Stable

The stable outlook reflects our assumption that the Philippine economy will continue to achieve above-average real GDP growth over the medium term, supporting the sovereign's credit profile.

We may raise the ratings over the next two years if the government makes significant further achievements in its fiscal reform program, or if the country's external position improves such that its status as a net external creditor becomes more secure over the long term. We may also raise the ratings if we find that the institutional settings in the Philippines have improved markedly.

We may lower the ratings if the government's fiscal program leads to much higher-than-expected net general government debt levels, or if real GDP growth declines significantly.

(Originally published April 30, 2019)

Table 18

Philippines
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 2.9 2.9 3.0 3.0 3.1 3.4 3.7 4.1 4.6
GDP growth 6.2 6.1 6.9 6.7 6.2 6.0 6.2 6.4 6.7
GDP per capita growth 4.4 4.3 5.1 5.0 4.6 4.6 4.8 5.0 5.3
Current account balance/GDP 3.8 2.5 (0.4) (0.7) (2.6) (2.2) (2.4) (2.4) (2.4)
Gross external financing needs/CAR&FXR 61.4 63.9 67.9 70.4 73.9 76.2 78.1 80.9 83.8
Narrow net external debt/CAR (20.1) (20.8) (25.4) (25.1) (18.6) (16.0) (10.5) (5.1) (0.1)
GG balance/GDP 1.1 0.9 (0.6) (0.5) (1.4) (1.8) (2.4) (2.4) (2.4)
GG net debt/GDP 27.2 28.0 28.7 29.1 29.1 28.4 28.1 27.9 27.5
CPI inflation 3.6 0.7 1.3 2.9 5.2 2.6 2.7 2.9 3.3
Bank credit to resident private sector/GDP 45.7 48.4 51.3 55.0 57.2 60.7 63.2 65.8 68.3
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Singapore (AAA/Stable/A-1+)

Unsolicited rating

  • Analyst: yeefarn.phua@spglobal.com
  • Latest published summary: Singapore (May 13, 2019)
Ratings score snapshot
  • Institutional assessment: 1
  • Economic assessment: 1
  • External assessment: 1
  • Fiscal assessment, budget performance: 1
  • Fiscal assessment, debt burden: 1
  • Monetary assessment: 1
Outlook: Stable

The stable outlook reflects our expectation that Singapore will maintain its extensive fiscal and external stock positions. The ratings may come under pressure if a severe external shock leads to a structural deterioration in Singapore's fiscal position and an economic growth contraction. However, in our view, Singapore's fiscal reserves and its responsive policies can address these shocks. Therefore, we consider a downgrade in the next two years as improbable.

(Originally published May 13, 2019)

Table 19

Singapore
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 57.6 55.7 56.7 60.3 64.6 63.9 65.5 68.4 71.3
GDP growth 3.9 2.9 3.0 3.7 3.1 0.7 1.4 2.0 2.1
GDP per capita growth 2.6 1.7 1.6 3.6 2.7 (0.6) 0.3 1.1 1.3
Current account balance/GDP 18.0 17.2 17.5 16.4 17.9 15.6 15.0 15.0 13.7
Gross external financing needs/CAR&FXR 159.6 166.5 162.7 158.8 157.0 159.7 164.5 165.5 166.1
Narrow net external debt/CAR (60.1) (64.6) (69.1) (69.5) (68.3) (61.1) (54.2) (49.7) (44.9)
GG balance/GDP 8.4 4.7 6.4 9.9 3.5 3.0 3.0 3.0 3.0
GG net debt/GDP (82.1) (75.9) (71.2) (46.5) (52.4) (42.7) (32.3) (30.8) (25.9)
CPI inflation 1.0 (0.5) (0.5) 0.6 0.4 0.6 1.2 1.7 1.9
Bank credit to resident private sector/GDP 128.1 122.4 124.1 122.7 121.9 128.1 131.3 133.1 136.5
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Sri Lanka (B/Negative/B)

  • Analyst: rain.yin@spglobal.com
  • Latest published research update: Sri Lanka Outlook Revised To Negative On Fiscal Deterioration; Ratings Affirmed At 'B/B' (Jan. 14, 2020)
Ratings score snapshot
  • Institutional assessment: 5
  • Economic assessment: 5
  • External assessment: 6
  • Fiscal assessment, budget performance: 5
  • Fiscal assessment, debt burden: 6
  • Monetary assessment: 4
Outlook: Negative

The negative outlook reflects our view that Sri Lanka's fiscal trajectory over the next two to three years could deviate from a fiscal consolidation path. The sizable deficits will add to Sri Lanka's already-large debt stock at a faster pace.

We could lower our ratings over the next 12 months if we believe that the fiscal position could deteriorate further from our current forecast, either due to policy changes or growth underperforming expectations. This will further weaken fiscal sustainability and increase the risks of sudden shifts in investor sentiment or changes in global credit conditions.

We could revise the outlook to stable if we see credible improvements in the fiscal and debt metrics on a sustained basis.

(Originally published Jan. 14, 2020)

Table 20

Sri Lanka
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 3.8 3.8 3.9 4.1 4.1 3.9 4.2 4.6 5.0
GDP growth 5.0 5.0 4.5 3.4 3.2 2.7 4.0 4.2 4.5
GDP per capita growth 4.0 4.0 3.3 2.3 2.1 2.0 3.3 3.5 3.8
Current account balance/GDP (2.5) (2.3) (2.1) (2.6) (3.2) (2.7) (3.0) (2.9) (2.7)
Gross external financing needs/CAR&FXR 120.6 120.6 120.7 128.2 120.5 123.9 118.2 116.7 108.4
Narrow net external debt/CAR 127.4 136.6 141.6 143.1 139.1 151 148.4 146.7 144.1
GG balance/GDP (5.7) (7.6) (5.3) (5.5) (5.3) (5.8) (6.1) (5.6) (5.2)
GG net debt/GDP 70.7 77.0 77.8 76.3 82.1 83.0 83.1 82.7 81.8
CPI inflation 3.3 2.2 4.0 6.6 4.3 4.3 5.0 5.0 5.0
Bank credit to resident private sector/GDP 30.6 35.8 39.5 40.9 43.8 46.7 49.2 51.8 54.5
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Taiwan (AA-/Stable/A-1+)

Unsolicited rating

  • Analyst: rain.yin@spglobal.com
  • Latest published summary: Taiwan (May 3, 2019)
Ratings score snapshot
  • Institutional assessment: 3
  • Economic assessment: 3
  • External assessment: 1
  • Fiscal assessment, budget performance: 2
  • Fiscal assessment, debt burden: 3
  • Monetary assessment: 2
Outlook: Stable

The stable outlook reflects our expectations that cross-strait and international trade relations will continue to allow the Taiwanese economy to grow steadily.

We may raise the ratings if current tensions between the U.S. and China ease materially, thereby reducing the risks to Taiwanese economic and export growth. This could lift average income to a level compatible with a stronger assessment of economic support for the ratings. We may also raise the ratings if fiscal reforms sustainably lower Taiwan's budgetary shortfalls such that government debt reduces significantly.

We may lower the ratings if the fiscal deficits structurally widen due to a failure to adjust to unfavorable demographics or external shocks, ultimately resulting in materially higher public-sector liabilities. We may also lower the ratings if cross-strait relations deteriorate sharply, resulting in heightened geopolitical risks and adverse effects on economic performance.

(Originally published May 3, 2019)

Table 21

Taiwan
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 22.9 22.8 23.1 25.1 25.8 25.9 27.4 28.5 29.6
GDP growth 4.7 1.5 2.2 3.3 2.8 2.5 2.4 2.2 2.2
GDP per capita growth 4.5 1.2 2.0 3.2 2.7 2.3 2.3 2.1 2.1
Current account balance/GDP 11.3 13.6 13.1 14.1 11.7 10.7 10.1 10.5 10.3
Gross external financing needs/CAR&FXR 64.8 62.3 58.4 59.9 61.9 63.2 63.6 64.6 65.6
Narrow net external debt/CAR (94.5) (110.8) (119.2) (111.8) (103.6) (108.1) (105.1) (102.4) (101.0)
GG balance/GDP (0.8) 0.1 (0.3) (0.1) 0.0 (0.5) (0.7) (0.5) (0.4)
GG net debt/GDP 40.1 37.4 36.3 34.8 33.6 33.1 32.5 31.9 31.3
CPI inflation 1.2 (0.3) 1.4 0.6 1.4 0.7 1.0 1.0 1.0
Bank credit to resident private sector/GDP 146.4 145.8 146.8 151.8 157.0 158.1 158.2 159.2 160.2
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Thailand (BBB+/Positive/A-2)

  • Analyst: rain.yin@spglobal.com
  • Latest published summary: Thailand Outlook Revised To Positive; 'BBB+/A-2' Ratings Affirmed (Dec. 11, 2019)
Ratings score snapshot
  • Institutional assessment: 4
  • Economic assessment: 4
  • External assessment: 1
  • Fiscal assessment, budget performance: 3
  • Fiscal assessment, debt burden: 2
  • Monetary assessment: 2
Outlook: Positive

The positive outlook reflects our assessment that political uncertainty in Thailand has begun to ease with the return of an elected government. With progress in implementing national reforms and strategy plans, we believe policy continuity and political stability will improve.

We may raise the rating over the next 24 months if there are clearer signs the key political players are committed to the current political framework and that abrupt and unexpected political changes become unlikely. In this scenario, we expect the government will continue to implement key reform and strategies according to national plans, despite the complexities of operating in a multiparty parliamentary democracy.

We could revise the outlook to stable if pressure on the current political process builds substantially, resulting in increasing social tensions and uncertainty that raise the likelihood of abrupt political changes. In addition, if growth is persistently weaker than what we currently forecast, we could also revise the outlook to stable.

(Originally published Dec. 11, 2019)

Table 22

Thailand
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 6.0 5.8 6.0 6.6 7.3 7.8 8.3 8.7 9.1
GDP growth 1.0 3.1 3.4 4.0 4.1 2.6 2.9 3.0 3.4
GDP per capita growth 0.6 2.8 3.1 3.8 3.8 2.3 2.6 2.8 3.2
Current account balance/GDP 2.9 6.9 10.5 9.7 5.6 6.3 4.9 4.7 5.0
Gross external financing needs/CAR&FXR 74.2 70.9 68.7 66.9 68.7 67.4 69.1 69.7 69.8
Narrow net external debt/CAR (14.6) (20.8) (25.2) (26.4) (24.9) (26.2) (26.5) (26.6) (26.7)
GG balance/GDP 0.0 1.0 1.3 0.8 1.1 (1) (1.6) (1.8) (1.5)
GG net debt/GDP 20.1 20.9 21.2 22.5 22.9 24.1 25.8 27.6 28.8
CPI inflation 1.9 (0.9) 0.2 0.7 1.1 0.8 0.9 1.1 1.3
Bank credit to resident private sector/GDP 123.3 124.9 122.9 121.3 121.2 123.0 124.1 125.3 125.4
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Vietnam (BB/Stable/B)

  • Analyst: andrew.wood@spglobal.com
  • Latest published research update: Vietnam Ratings Affirmed At 'BB/B'; Outlook Stable (Oct. 17, 2019 )
Ratings score snapshot
  • Institutional assessment: 4
  • Economic assessment: 4
  • External assessment: 3
  • Fiscal assessment, budget performance: 4
  • Fiscal assessment, debt burden: 4
  • Monetary assessment: 4
Outlook: Stable

The stable outlook reflects our expectation that Vietnam's economy will continue to expand rapidly, exemplifying gradual improvements in its policymaking settings and underpinning credit metrics.

We may raise our rating if Vietnam's strong economy translates into fiscal outcomes better than we had expected, and its banking systemic risks recede further.

We may lower the rating if:

  • Evidence emerges that recent administrative developments indicate more systemic shortcomings, potentially undermining future timeliness of payment on debt obligations;
  • The economy slows significantly and unexpectedly. Potential causes for such a slowdown could include a material downturn in the global economy, or the emergence of considerable banking system stress domestically; or
  • Fiscal performance deteriorates markedly, leading to a higher annual change in net general government debt relative to GDP.

(Originally published Oct. 17, 2019)

Table 23

Vietnam
2014 2015 2016 2017 2018 2019e 2020f 2021f 2022f
GDP per capita (in ‘000) 2.1 2.1 2.2 2.4 2.6 2.7 2.9 3.2 3.5
GDP growth 6.0 6.7 6.2 6.8 7.1 7.0 6.7 6.6 6.5
GDP per capita growth 4.9 5.5 5.1 5.7 6.0 5.9 5.6 5.5 5.5
Current account balance/GDP 5.0 (1.1) 0.3 (0.7) 2.4 2.1 2.2 2.2 2.2
Gross external financing needs/CAR&FXR 91.3 94.3 98.1 97.3 93.1 92.5 90.6 88.5 87.0
Narrow net external debt/CAR 28.6 37.3 37.8 34.4 29.0 22.5 15.8 9.8 3.8
GG balance/GDP (6.3) (6.4) (3.9) (4.7) (4.8) (4.6) (4.4) (4.2) (4)
GG net debt/GDP 45.9 49.3 51.7 46.7 42.6 43.2 44.0 44.3 44.2
CPI inflation 4.7 0.9 3.2 3.5 3.5 2.6 3.0 4.0 4.5
Bank credit to resident private sector/GDP 100.3 111.9 123.8 130.7 133.1 136.1 141.1 145.2 148.9
A free and  interactive version of a larger number of sovereign risk indicators can be found at spratings.com/sri

Related Research

  • Global Sovereign Rating Trends 2020: Sovereign Debt Buildup Continues, Jan. 29, 2020
  • European Developed Sovereign Rating Trends 2020, Jan. 29, 2020
  • Americas Sovereign Rating Trends 2020, Jan. 29, 2020
  • EMEA Emerging Markets Sovereign Rating Trends 2020, Jan. 29, 2020
  • Sovereign Ratings List, Jan. 14, 2020
  • Sovereign Ratings History, Jan. 14, 2020
  • Sovereign Ratings Score Snapshot, Jan. 2, 2020

This report does not constitute a rating action.

Primary Credit Analyst:KimEng Tan, Singapore (65) 6239-6350;
kimeng.tan@spglobal.com
Secondary Contacts:Martin J Foo, Melbourne + 61 3 9631 2016;
Martin.Foo@spglobal.com
Rebecca Hrvatin, Melbourne (61) 3-9631-2123;
rebecca.hrvatin@spglobal.com
YeeFarn Phua, Singapore (65) 6239-6341;
yeefarn.phua@spglobal.com
Anthony Walker, Melbourne + 61 3 9631 2019;
anthony.walker@spglobal.com
Andrew Wood, Singapore + 65 6239 6315;
andrew.wood@spglobal.com
Rain Yin, Singapore (65) 6239-6342;
rain.yin@spglobal.com
Ruchika Malhotra, Singapore (65) 6239-6362;
ruchika.malhotra@spglobal.com
Raphael Mok, Singapore (65) 6597-6167;
raphael.mok@spglobal.com

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