When China Sneezes: The Slowdown Spillover Across APAC

2026 presents a landscape of mixed signals for Asia-Pacific: US tariffs are at their highest levels since the 1930s (effective rate of 13.6%), and China’s growth is projected to slow to 4.1%. Yet, Fitch Ratings has maintained a Neutral outlook for the sector.

Thomas Rookmaaker, Head of APAC Sovereigns at Fitch Ratings, joins BFM to break down the region's "two-speed recovery", where AI-driven economies surge while traditional exporters lag, and warns that fiscal buffers are slowly eroding as government debt climbs.

We discuss:.

• The "Neutral" Verdict: Why Fitch maintains a stable sector outlook despite geopolitical headwinds, citing strong FX reserves and credit buffers in developed markets.

• The "Two-Speed" Recovery: How the AI boom is shielding tech-heavy nations while non-tech exporters face dampened demand from the US and China.

• The China Slowdown: The impact of China’s downgrade to 'A' and the property slump on the broader region, with spillover effects hitting commodity prices and consumption.

• Fiscal Erosions & Social Unrest: With median government debt-to-GDP rising to 50.1%, we discuss why fiscal consolidation is stalling and how social unrest (e.g., Nepal, Indonesia) is forcing governments to spend more.

• Country Watchlist:

  • Malaysia: Rated 'BBB+' (Stable) supported by political stability and 4% growth, though debt reduction remains gradual.

  • Thailand: The outlier with a Negative outlook due to delayed tourism recovery and high household debt.

  • The Danger Zone: Why the Maldives ('CC') faces a critical test with a $500m Sukuk repayment in April.

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