Fitch bullish on strong APAC performance as domestic demand surges

India and Indonesia are expected to be strong peformers next year.

Economic activity in Asia Pacific is expected to maintain its momentum thanks to robust domestic demand and rising volumes of world trade, according to credit rating agency Fitch.

Fitch forecasts that economic performance will be stronger next year for more than half of the 12 emerging market countries with China as a notable exception as it moves towards an impending slowdown from 6.8% growth in 2017 to a forecasted 6.4% next year.

As China tightens its credit conditions to curb excessive credit growth, the impact is projected to be spread over the region as trade volumes will experience flat growth but Fitch believes that the effect will be largely contained thanks to a supportive global environment.

India and Indonesia are projected to be post the largest annual growth in the region with a forecasted 7.3% and 5.4% growth rate respectively.

Infrastructure spending is similiarly high in Philippines, Indonesia, Pakistan, and Maldives.

Frontier markets like Mongolia and Sri Lanka are also gradually stabilising through policy implementation under IMF-supported programmes.

Fitch notes, however, that risks remain as the spectre of protectionism looms over the region with the recent withdrawal of the United States from the Trans-Pacific Partnership earlier this year.

Moreover, geopolitical tensions in the Korean Peninsula and South China Sea remain a pressing concern as they can potentially dampen investor sentiment and international trade relations.