Fitch Ratings revises 2025 global sovereigns outlook

New Straits Times

a day ago

KUALA LUMPUR: Fitch Ratings has revised the 2025 global sovereigns outlook to "deteriorating" from "neutral" to reflect the increase in trade tariffs and policy uncertainty.
In a statement today, the credit rating agency said the situation will weaken the global growth outlook and heighten the risk of more testing financing conditions, with public finance and political risks remaining high.
"The escalation in the global trade war, along with uncertainty over the endpoint for tariffs and their impact on global trade volumes, supply chains, investment, and international relations, constitutes a significant adverse global economic shock," Fitch Ratings said.
"Uncertainty over the extent and timing of the effects on prices and activity adds to uncertainty over the path of US Federal Reserve policy rates and the risk of volatility in financing conditions," the statement said.
Fitch Ratings said a fall in Brent crude oil prices to US$65 a barrel in 2025 from US$79.5 in 2024 will increase economic and fiscal pressures on major exporters, while cuts to US international aid add to risks facing some emerging markets.
In contrast, a depreciation of the US dollar eases the burden on emerging markets with US dollar-denominated debt and gives some emerging-market central banks scope to cut interest rates faster, it added.
Fitch Ratings said public finances would remain under pressure this year from rising defence spending, interest costs, demographic trends, weak growth and social pressures, particularly in developed markets.
"We expect median government debt to gross domestic product (GDP) to increase slightly to 54.5 per cent at end-2025 from 54.1 per cent at end-2024. Geopolitical risks remain high given the wars in Ukraine and the Middle East, US-China strategic rivalry, trade tensions, social discontent, and the flux in US foreign policy," the statement said.
-- BERNAMA