Moody?s has changed the industry outlook for banks in Australia, Hong Kong, Taiwan, the Philippines, Mongolia and Cambodia to negative from stable, based on Moody?s revised scenarios for global macroeconomic trends.
Furthermore, in view of these changes, the industry outlooks on most banking systems in Asia Pacific have also turned negative. Outlooks for industries or sectors represent Moody?s view on the likely future direction of credit conditions in that sector. They do not represent our projection of rating upgrades versus downgrades.
While the direct impact of the current global financial crisis on banks in Asia Pacific has been comparatively limited, these changes in the industry outlook reflect expectations that gathering economic headwinds from a global recession will increasingly test the resilience and strength of banking industries in the region.
Moody?s Sovereign Risk Analysis Group on December 5, 2008 published an update to our Global Risk Scenarios in a report entitled ? Global Macro-risk Scenarios 2009-2010?From Global Integration to Global Disintegration ?.
Based on this new report, Moody?s central scenario for 2009-2010 has shifted to one of ?Global Healing,? and in which the process of global de-leveraging and tight financial conditions depress emerging markets to below-trend growth and leads to economic stagnation.
There is also a downside risk that this scenario could shift to a more negative outcome of ?Disintegration,? which would entail a collapse in global trade, commodity prices and international financial flows.
However, for those countries with sufficient room to implement expansionary fiscal and monetary policies, there is a chance that the impact could be blunted and the scenario could be one of ?Global Resiliency.?