International credit ratings agency Fitch Ratings has announced that it has revised its 2025 global sovereigns outlook to “deteriorating” from “neutral” due to an increase in tariffs and policy uncertainty. This will weaken the global growth outlook and intensify the risk of more challenging financing conditions, with public finance and political risks remaining high.
According to the agency, the escalation of the global trade war and the uncertainty surrounding the endpoints of tariffs and their effects on global trade volumes, supply chains, investments, and international relations have been a great detrimental shock to the global economy. There is uncertainty about the extent and timing of the impacts on prices and economic activity. This increases uncertainty about the course of the US Federal Reserve’s policy rates and creates the risk of volatility in financing conditions.
Fitch also stated that, due to increases in defense spending, interest costs, demographic trends, weak growth and social pressures, particularly in developed markets, public finances will remain under pressure this year. In addition, geopolitical risks persist due to the ongoing military conflicts in Ukraine and the Middle East, the strategic rivalry between the US and China, trade tensions, social unrest, and changes in US foreign policy.