SINGAPORE, Sept. 1– South and Southeast Asia are well positioned to capture opportunities arising from the expansion of digital trade, supported by the region’s high trade openness and rapid digital adoption, Moody’s Ratings said on Tuesday.
The rating agency said in a note that a boom in capital spending on digital infrastructure, particularly data centers, will support gross domestic product (GDP) growth across the region, although the gains will be constrained by reliance on imported equipment and specialist technology.
Moody’s expects the economic benefits to be front-loaded in the years leading up to 2030, partly offset by import leakage. Beyond 2030, data center construction is expected to continue at a slower pace.
While construction activity will support investment, imported information technology (IT) and specialist equipment could limit domestic economic multipliers and temporarily weigh on external balances, it said.
Moody’s projections show that Malaysia and Singapore are likely to capture the most material economy-wide benefits, while the effects elsewhere in South and Southeast Asia are expected to be positive but relatively small compared with national GDP.
It also said the longer-term credit upside will depend on the development of broader digital ecosystems, including greater cloud adoption, digital services exports and the localization of equipment suppliers and supporting service providers.
All markets also stand to benefit from new power generation and network capacity, although policy design will influence how much of the gains are retained domestically, said Moody’s.
Moody’s, however, said the key challenge will be ensuring that investment in digital infrastructure translates into durable, locally anchored growth while resource sustainability, supply-chain development and human capital keep pace. (Namibia Daily News / Xinhua)
