Moody's sees credit benefit for all TPP nations
The ratings agency has upgraded Malaysia's outlook to positive; all others are stable.
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The Trans-Pacific Partnership (TPP) trade agreement will deliver a positive credit benefit to its 12 member nations.
Ratings agency Moody's Investors Service says the deal is credit positive for all participating sovereigns but especially for those in Asia.
It says the deal will reduce the cost of trade and open up new investment opportunities, supporting growth.While full details of the agreement have yet to be published, greater access to the US for their goods should help to make Asian countries the biggest beneficiaries in GDP-relative
terms, it says.
In particular, Moody’s says Vietnam's apparel and shoe manufacturers will profit from lower import duties with the US and Japan.
Likewise, Malaysia's palm oil, rubber and electronics exporters will see substantial value from the TPP deal. In Japan, cars and auto-parts makers in particular stand to do well out of the agreement.Australia and New Zealand's farmers will also benefit from increased market access and lower tariffs on their goods, the report says.
For Singapore, which has trade agreements with nine TPP countries, the deal will complement these existing pacts and boost investment and trade flows with partner nations.Another positive aspect of the trade negotiations has been to act as a catalyst for reform in several countries in the region, such as Japan and Vietnam.
One modestly credit-negative aspect to the trade deal is that it could hurt governments' fiscal balances by reducing their customs revenues over the longer term. But additional receipts from an expected uptick in economic growth due to the agreement are likely to offset foregone tariff revenue.The credit outlooks for all 12 TPP countries are: Australia (Aaa stable), Brunei (unrated), Canada (Aaa stable), Chile (Aa3 stable), Japan (A1 stable), Malaysia (A3 positive), Mexico (A3 stable), New Zealand (Aaa stable), Peru (A3 stable), Singapore (Aaa stable), US (Aaa stable) and Vietnam (B1 stable).
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Nevil Gibson
Tue, 13 Oct 2015
Tue, 13 Oct 2015
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Moody's sees credit benefit for all TPP nations
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