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Friday, March 29, 2024

PHL among vulnerable to flooding risks–Moody’s

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THE Philippines has been flagged as one of the countries in the world with the biggest flooding risk, Moody’s Investors Service said in a recent climate change review on sovereigns across the world.

This particular physical climate change risk, Moody’s said, is a credit negative risk for the sovereign. Credit negative for sovereigns usually means that a further deterioration of these conditions may lead to a downgrade in the country’s current credit standing.

“Many countries are exposed to at least one climate hazard, with emerging markets generally more likely to face multiple challenges than advanced economies. Sovereigns in Asia Pacific stand out for their exposure to flood risk—highest for Cambodia, the Philippines and Thailand,” Moody’s said.

According to Moody’s physical climate risks are credit negative for sovereigns as weaker economic activity due to increasingly frequent climate-related events will likely weigh on fiscal revenue and may lead to an increase in transfer payments and welfare expenditures, particularly in the event of climate shocks.

Moody’s, meanwhile, identified Hong Kong, Singapore, Denmark and the Netherlands as advanced economies most exposed to rising sea levels.

“Over time, repeated climate-related natural disasters can weigh on investment, productivity growth and economic strength, which can weaken a sovereign’s credit profile,” Moody’s Vice President-Senior Credit Officer Steffen Dyck said.

“There is also a large gap between financing needs for climate-adaptation measures and low-cost funding sources. This threatens the credit profiles of sovereigns which are highly exposed to physical climate risk, especially those with already low fiscal strength,” Dyck added.

Moody’s said climate trends also risk amplifying existing social pressures by contributing to forced displacement and migration or threatening food security.

Strong economic structures and good quality of infrastructure and health care together reduce the susceptibility to climate change for sovereigns like Japan and Hong Kong, the credit watcher said.

Earlier this year, Moody’s already said that the spike in the country’s cases is also a “credit negative” for the Philippine economy.

Moody’s currently rates the Philippines at Baa2 with a stable outlook. 

Read full article on BusinessMirror

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