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MANILA, Philippines – Asia-Pacific sovereigns are contending with a deteriorating credit environment as limited fiscal space leaves governments more vulnerable to the prolonged economic fallout from the Middle East war, Fitch Ratings said.
In a report, the major debt watcher downgraded its 2026 sector outlook on Asia-Pacific sovereigns to “deteriorating” from “neutral,” saying the conflict has heightened risks to economic growth, inflation, financing conditions and public finances across the region.
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The revision comes as many Asia-Pacific economies remain heavily dependent on imported oil, gas and related products such as fertilizers, much of which pass through the Strait of Hormuz.
