In 2021, governments across Asia Pacific face fiscal erosion as they extend their economic support, with the deterioration most severe for the lowest-rated sovereigns. Over the longer term, the pandemic will trigger or accelerate shifts in development priorities and supply chains which will drive new growth models. 

The proposed $1.9 trillion pandemic aid package includes funding for vaccine distribution, state and local governments, and additional relief for individuals. The magnitude of the effects on economic and credit conditions would depend on the size and scope of the package that Congress ultimately passes.

Our first in-depth report on a Chinese province analyses how Zhejiang’s diverse and rapidly developing economy supports its solid fiscal strength and quick recovery from the pandemic. However, Zhejiang’s fiscal revenue has become more reliant on land sales over the past few years, posing credit risks.