Fitch: Major uncertainties from geopolitical risks and fiscal/economic policy volatility persist in the global credit outlook

Fitch: Major uncertainties from geopolitical risks and fiscal/economic policy volatility persist in the global credit outlook

Fitch Highlights Geopolitical and Policy Risks as Key Challenges for Global Credit Outlook

Fitch Ratings has warned that persistent geopolitical tensions and fiscal/economic policy volatility are heightening uncertainties in the global credit landscape, particularly for emerging markets. In a January 29, 2026, analysis, the agency noted that escalating conflicts, trade disruptions, and shifting power dynamics are amplifying credit risks for economies already grappling with fragile recoveries and high debt levels.

Emerging markets face disproportionate exposure to these pressures, as geopolitical instability—ranging from regional conflicts to sanctions regimes—disrupts trade flows, capital access, and investor confidence. Fitch emphasized that countries reliant on commodity exports or foreign direct investment are especially vulnerable to sudden shifts in global demand and financing conditions. For example, prolonged tensions in key trade corridors or technology-driven decoupling between major economies could exacerbate liquidity constraints and fiscal imbalances.

The agency also underscored the role of domestic policy volatility in compounding risks. Upcoming elections in several major economies, coupled with divergent approaches to fiscal stimulus and regulatory reform, may lead to fragmented policy responses. Fitch highlighted that inconsistent monetary and fiscal strategies could undermine efforts to stabilize growth, particularly in markets with limited policy flexibility.

While advanced economies are not immune to these challenges, their stronger institutional frameworks and access to global liquidity provide a buffer. However, Fitch cautioned that spillovers from emerging market stress—such as reduced commodity exports or increased financial market volatility—could indirectly affect global growth trajectories.

In its assessment, Fitch reiterated that credit assessments will remain sensitive to geopolitical developments and policy coherence in 2026. Investors are advised to monitor regional conflicts, election outcomes, and central bank interventions as critical drivers of credit risk. The agency's analysis underscores the need for tailored risk management strategies in an environment of heightened uncertainty.