S&P places Taiwan's economic risk at same level as U.S.

S&P places Taiwan's economic risk at same level as U.S.

Standard & Poor's, a U.S.-based ratings agency, has placed Taiwan's economic risk at the same level as that of the United States, indicating that the country faces low to moderate economic challenges, an S&P report showed Tuesday.

According to S&P's Banking Industry Country Risk Assessment (BICRA), Taiwan has been placed in the group 3 category, the same as the U.S., Hong Kong and Singapore.

The BICRA report uses a scale from 1 to 10, ranging from the lowest-risk banking systems in group 1 countries to the highest-risk in group 10.

The BICRA analysis for a country covers rated and unrated financial institutions that take deposits, extend loans, or engage in both activities. In addition, the analysis evaluates the entire financial system of a country by taking into account the relationship between the banking industry and the financial system as a whole.

Fan Wei-hua, an analyst with Taiwan Ratings, a local partner of S&P, said that the BICRA report analyzes the banking systems of more than 80 countries around the world. As Taiwan has been placed in the group 3 category, the country's economic risk is perceived at a low-to-moderate degree.

Fan said that the BICRA report looks at economic growth, monetary policies, financial stability, and property market conditions, as well as the movement of a country's equity market.

The analyst said that after considering these factors, the report determines whether the economy could face a bubble and the state of the asset quality of its banking system.

According to the latest BICRA report, China has been placed in group 6 and Thailand, Indonesia and the Philippines have been categorized as the countries in group 7, showing that these economies face higher economic risk than Taiwan.

Vietnam and Cambodia have been put in group 9 under the BICRA report, encountering even higher economic risk than Taiwan, the report shows.

However, Japan has been categorized as group 2, meaning it faces lower risk than Taiwan, the BICRA report indicates.

Updated : 2021-01-25 22:22 GMT+08:00