Geopolitical Tensions to Elevate Emerging Market Credit Risks by 2026: Fitch Ratings

• Fitch Ratings warns that heightened geopolitical risks will increase credit pressures for emerging-market sovereigns and issuers by 2026.
• The agency's base-case forecast for 2025 is net neutral, but evolving geopolitical events pose downside risks to creditworthiness.
• Shifts in US foreign policy, like the removal of Nicolas Maduro, could realign Latin America and impact investor sentiment.
• Transatlantic tensions, such as disagreements over Greenland, exacerbate geopolitical uncertainty in Eastern Europe, raising conflict risks.
• Elevated defense spending and strategic competition will strain fiscal balances, potentially increasing borrowing costs and credit spread volatility.

Why It Matters: Geopolitical tensions are set to significantly increase credit risks for emerging markets by 2026, warns Fitch Ratings.