External headwinds weaken fiscal consolidation in Asia-Pacific – Fitch

FITCH Ratings this week said external pressures, including weaker global demand and US tariffs on Asian exports, are slowing fiscal consolidation efforts across the Asia-Pacific, even as the region’s growth remains comparatively stronger than elsewhere.

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US tariffs are hitting exports from China and the rest of the Asia-Pacific (APAC), but Fitch forecasts growth to remain higher than in other regions.

US Dollar weakness and the ability of some central banks to cut policy rates will mitigate the impact of weaker global demand, but the headwinds are already affecting the fiscal consolidation efforts of several governments.

“Policy responses to the weaker global demand and uncertainty will be key towards easing the impact of the headwinds on sovereign credit profiles,” Fitch said.