No Risks To India Due To Covid Interruptions In China: Fitch

The global ratings agency Fitch has stated that India, which has a limited export market to China, is more invulnerable to the possibility of a new outbreak related to pandemic there. The country's debt burden does not allow for a quick response to any shocks. However, the more frequent disruptions caused by Covid in China can affect the creditworthiness of the other sovereigns and territories within the Asia-Pacific (APAC) region via channels like tourism, trade, and financing the agency stated.

China is the largest export market for rating by Fitch APAC governments and their territories. China is also a significant source of intermediate goods that could be affected by disruptions that could impact exports from the region. "Many Asian economies have a large degree of trade transparency and this can increase the impact of their economy," the agency said.

The effect of this could be different according to the country. "Those that are at the bottom of the spectrum of ratings including Laos (CCC), Pakistan (B-/Negative) and Mongolia (B/Stable) are likely to be exposed through multiple channels and their ratings could face pressure to fall," Fitch said.

In the aftermath of the Covid-19 epidemic and the conflict between Ukraine and Russia an additional impact from slower economic growth in China could further increase the risk of credit in frontier markets, which could undermine their institutional and political stability It added.