Neutral outlook for APAC transport infrastructure as demand remains resilient

Fitch Ratings has unveiled a neutral outlook for transportation infrastructure in the Asia-Pacific (APAC) region, highlighting the resilience of demand as a key factor cushioning the sector from potential challenges.According to Fitch Ratings, despite looming headwinds such as surges in fuel prices and high-interest rates, Fitch Ratings anticipates the essential nature of transportation facilities and resilient consumer spending to mitigate negative impacts on traffic.

Fitch’s sector outlook is based on the expectation of stabilizing economic growth across APAC in 2024.The latest Global Economic Outlook from Fitch forecasts steadier economic growth and stabilizing inflation in major APAC economies.Although there might be a slowdown in manufacturing activities in some markets, the report underscores the resilience of consumer spending and the vital role transportation facilities play in limiting adverse effects on volume-based assets.

For the port sector, Fitch foresees a decline in throughput in 2024.This projection is linked to the normalization of GDP growth after a period of post-pandemic volume increase.On the other hand, airports in the APAC region are expected to continue benefiting from the unwinding of pent-up demand.Fitch acknowledges that while growth is anticipated, it is likely to decelerate in the latter half of 2024.Despite short-term projections, Fitch Ratings emphasizes robust fundamentals in the long term, which are expected to drive capital investments in transportation infrastructure across APAC.

However, the report notes that some project sponsors might exercise caution due to escalating construction costs and persistently high finance costs.Despite these challenges, Fitch points out that access to funding channels for Fitch-rated borrowers remains robust, providing a level of stability amid uncertainties.Fitch Ratings maintains a neutral sector outlook for APAC transport infrastructure, anticipating a stabilizing economic growth trajectory in 2024.

The report underscores the essential role of transportation facilities, resilient consumer spending, and ongoing capital investments as factors contributing to the sector’s overall resilience.While short-term challenges are acknowledged, the report signals a cautious optimism regarding the region’s ability to weather the storm and maintain a resilient transportation infrastructure landscape.