Credit Forecast

December 13 (LBO) – Slow global economic growth, lower reserve build up and politics will be in the spotlight for sovereign credit assessments in emerging Asia, including Sri Lanka, next year, rating agency Fitch said Wednesday.

“For the region, Fitch forecasts a reserve build of USD300 billion next year, which would be slightly lower than 2006, but still enough to improve net debt positions and support sovereign creditworthiness,” said James McCormack, head of Asia Sovereigns at Fitch.

The region’s credit considerations would include effects of a slowdown in economic growth in the United States, an expected reduction in the rate at which official foreign exchange reserves are accumulated and heightened political risk in several countries, a statement from the credit agency said.

Sri Lanka is facing a spiralling conflict as fighting escalates between the government and Tamil rebels, with fears of an imminent outbreak of war.

Political and security issues will be in focus across a number of Asian countries in 2007, including the Philippines, Thailand, Korea and Sri Lanka.

A return to peace is proving elusive in Sri Lanka, and there is a material risk that the conflict between the governm