Fitch Ratings has revised its global sovereign credit outlook for 2025 from “neutral” to “deteriorating,” citing rising trade tariffs, policy uncertainty, and heightened geopolitical tensions as key threats to global economic stability.
The agency highlighted that the unresolved global trade war and uncertainty over tariff decisions are disrupting international trade, investments, and supply chains. This unpredictability is also complicating interest rate forecasts for the U.S. Federal Reserve, raising concerns about financial market volatility.
Adding to global economic pressures, Brent crude oil prices are forecast to decline to USD 65 per barrel in 2025, down from USD 79.5 in 2024—posing a challenge to oil-exporting nations. Concurrently, planned U.S. cuts to international aid could adversely affect vulnerable emerging markets.
On a more positive note, Fitch said that a depreciating U.S. dollar may ease the burden of dollar-denominated debt for some developing economies and provide central banks more room to cut interest rates.
Despite this, public finances are likely to remain under pressure in 2025 due to growing defence budgets, interest payments, ageing populations, weak economic growth, and mounting social demands—particularly in advanced economies.
Fitch projects that the median global government debt-to-GDP ratio will rise slightly from 54.1% in 2024 to 54.5% by the end of 2025.
Geopolitical risks remain high due to ongoing conflicts in Ukraine and the Middle East, continued U.S.-China tensions, and evolving U.S. foreign policy. Nevertheless, sovereign credit ratings remain relatively stable for now, with 13 countries on a positive outlook and 10 on a negative one.
