Impact of Tariffs on Asia-Pacific Banking Outlook

Fitch Ratings has indicated a potential shift in its outlook for the Asia-Pacific banking sector, citing the introduction of new US tariffs as a significant factor. Previously, the agency had expected stable conditions for most banking systems in the region by 2025.

Countries at Risk

South Korea, Taiwan, and Thailand could see their banking sector outlooks downgraded from 'Neutral' to 'Deteriorating' if US tariffs exceed the current 10% rate or if economic growth is more adversely affected than anticipated.

For China and Hong Kong, the situation is even more dire, with higher tariffs likely to worsen the already 'Deteriorating' outlook. Meanwhile, Vietnam's 'Improving' forecast is at risk of being downgraded to 'Neutral' should trade tensions escalate.

Final Outcomes Pending

Fitch emphasizes that the ultimate impact on the banking sectors will depend on the final outcomes of ongoing tariff negotiations.