(Image source from: India immune to external shocks)

Rating agency Moody's said emerging economies in Asia Pacific region, including India, have a high degree of immunity to external shocks, but will face challenges when the US Federal Reserve begins raising interest rates. "A common challenge for emerging economies in the region will come when the US Federal Reserve begins to raise interest rates. Asia Pacific sovereigns generally exhibit strong external payments positions and government debt profiles relative to peers elsewhere in the world are the factors that should stand them in good stead," Moody's Investors Service said.

Most Asia Pacific (APAC) sovereigns have a relatively high degree of immunity to external economic shocks but their ratings momentum is diverging as some drive through ambitious reforms, while others struggle with long-standing challenges. "A key risk for credit quality is therefore whether governments can deliver on policy pledges," it said. Moody's has a 'Baa3' rating for India, with a positive outlook. Most sovereigns in Asia Pacific are net oil importers; the recent slump in oil prices will have a largely positive impact on the region. "Savings on energy costs will support sovereigns in their efforts to rein in budget deficits or rebuild fiscal buffers," Moody's noted.

By Premji