Fitch Warns: Iran Conflict Could Deepen Emerging Market Challenges

• Fitch Ratings states the Iran conflict could raise additional challenges for emerging market sovereigns.
• Impacts include energy imports, remittances, exchange rates, fiscal subsidies, and access to international finance.
• Conflict may lead to a stronger US dollar, weaker debt issuance market, and higher energy prices, fueling inflation.
• Vulnerabilities are acute for markets with stretched financing (e.g., Pakistan) or significant current account deficits.
• Risks are contained if Strait of Hormuz closure is brief and oil infrastructure damage is avoided; prolonged disruption poses greater threat.