Fitch's 'Inside Credit' Looks at Scenarios with Greatest Risk to Global Ratings
Fitch's base case is for a gradual slowdown, but equity market volatility and yuan devaluation highlight the economic adjustment and deleveraging challenges China is facing.
"If China's GDP growth fell to 2% by end-2017, many emerging markets would face a more severe and prolonged slowdown," says Eileen Fahey, Chief Credit Officer. "A number of factors including recessions in Russia and Brazil, lower commodity prices, and a strong U.S. dollar make it a fairly urgent risk for emerging markets."
Other risks addressed in the Risk Radar include persistently low oil prices, U.S. interest rates, Eurozone deflation and zero growth, U.S. medium-term fiscal challenges and North American consumer capacity.
Other topics covered in this week's edition of Inside Credit include:
- Ukraine Downgraded to 'Restricted Default'
- EU Bank Resolution Paths Diverge, Coordination Important
- European Funds Face Shrinking Market Liquidity, Capacity Issues
- GSII Capital Rules Deter Insurers from Greater Complexity
- Higher-Rated Issuers Gain from Change in China's Offshore Debt Policy
- TPP Would Set Key Precedents for Global Integration
- Lower Russian Bank Capital Ratio Would Be Credit Negative
- Video: Fitch in Brazil