MOODY’S Investors Service said on Monday that most sovereigns face a “significant negative shock” from the coronavirus pandemic and that recent developments in vaccine trials have not changed the rating agency’s forecasts.
“Most (sovereigns) face a significant economic loss, a marked increase in their debt burden, and some, in particular emerging markets, face a deterioration in debt affordability,” a top sovereign analyst at Moody’s said in an email responding to questions from Reuters.
“We have not changed our forecasts based on recent developments in progress on vaccine trials since they remain consistent with our general assumptions that some easing of the pandemic is likely next year, although only gradually,” Marie Diron, managing director of the agency’s Sovereign Risk Group, told Reuters.
Ms. Diron said the evolution of the pandemic, including vaccine availability, will be a key driver of economic trends going into the next year.
“The recovery will proceed at different paces in different countries, in part depending on the speed of return to normalcy, in part depending on the varied capacity of economies to recover from a shock,” Ms. Diron added.
Pfizer, Inc and Moderna, Inc are seeking US emergency use authorization for their experimental vaccines, but experts have said more than one vaccine would be needed to end the pandemic that has killed more than 1.4 million people globally.
Moody’s said in October that the global recession caused by the pandemic has been far deeper than expected and has disproportionately affected emerging and frontier market nations. The rating agency said earlier in November that it expected G20 (Group of 20) economies to contract by 3.8% collectively in 2020, followed by 4.9% growth in 2021 and 3.8% growth in 2022.
Last month, S&P Global told Reuters that some of the world’s top economies could see their credit ratings cut or put on downgrade warnings in the coming months in a second global wave of coronavirus-related revisions. — Reuters
