Slow vaccination weighs on recovery of A-Pac sovereign credit metrics: S&P

S&P Global Ratings expects most Asia Pacific sovereign credit ratings to remain unchanged in the next one to two years despite continued pressures posed by Covid-19.

"We have stable outlooks on more than two-thirds of 21 long-term sovereign ratings in the region currently," it said in a report published on Wednesday.

Covid-19 vaccines rolled out in several countries from late 2020 have helped to reduce pandemic-related uncertainties on the trends of economic and fiscal indicators.

The better clarity has allowed a few positive rating actions on governments that showed strong credit metrics for their respective rating levels at the beginning of the year.

"We expect much of Asia Pacific to return to relatively strong economic performance once the region has Covid-19 under control," said the report.

"Many parts of the region have been significantly affected by the pandemic and have seen sharp economic contractions in 2020. However, we believe the episode has not seriously damaged their economic potential."

Even so, slow vaccine rollouts may drag on the recoveries of some parts of the region in the next year or so. Most Asia Pacific countries are likely to receive enough vaccines for high inoculation rates only well into 2022 at the earliest, said the report.

Meanwhile, governments may have to maintain social distancing measures to keep infection rates at tolerable levels. This limits the extent of economic and fiscal repair in the next year or so.

"But with visibility of when the pandemic can be brought under control, we can better grasp the downside scenarios for rating metrics."

( With inputs from ANI )