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APAC sovereigns exposed to flooding risks, have limited capacity to adapt: Fitch

by AIP Online Bureau | Jan 5, 2024 | Disaster & Management, Eco/Invest/Demography, International News, Non-Life, Reinsurance, Risk Management | 0 comments

In South Asia, Bangladesh is the most prone to the risk of flooding. The materialisation of climate risks in these regions could lead to high economic losses. The cost of relocation from flood-prone areas and rebuilding following floods could be high, leading to significant fiscal costs for some sovereigns.

Several sovereigns in the Asia-Pacific region are highly exposed to physical risks from climate change, while their adaptation capacity is limited, particularly those with lower income per capita, and weaker governance and infrastructure preparedness, Fitch Ratings says.

“We believe international financing for adaptation and green transition purposes may help fill funding gaps for some sovereigns at the margins, but this is likely to be a small portion of overall funding needs,” said Fitch.

“We think south and south-east Asian populations and economies are the most exposed to flooding risks in the Asia-Pacific region. Vietnam stands out among south-east Asian nations as being highly prone to flooding risks, while the Philippines is one of the most exposed to risks from storms such as tropical cyclones,” it elaborated.

In South Asia, Bangladesh is the most prone to the risk of flooding. The materialisation of climate risks in these regions could lead to high economic losses. The cost of relocation from flood-prone areas and rebuilding following floods could be high, leading to significant fiscal costs for some sovereigns.

Fiscal buffers are constrained for most economies in south and south-east Asia, as their government debt is close to, or above, the peer median and/or revenue mobilisation is weak. This may be a negative rating driver as climate risks become more severe.

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