A sovereign credit rating is an independent assessment of the creditworthiness of a country or sovereign entity and how risky investing in it might be.
In particular, country risk denotes the risk that a foreign government will default on its bonds or other financial commitments increasing transfer risk. In a broader sense, country risk is the degree to which political and economic unrest affect the securities of issuers doing business in a particular country.
Are country risk classifications a sovereign risk classification?
The country risk classifications are not sovereign risk classifications and therefore should not be compared with the sovereign risk classifications of private credit rating agencies (CRAs).
Conceptually, they are more similar to the "country ceilings" that are produced by some of the major CRAs.
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Asia Pacific
The outlook for Asia Pacific is retained at ‘deteriorating’.
Economic growth in the region has been held up by domestic consumption and investments.
However, sluggish performance of merchandise exports, which continue to exert downward pressure on economic prospects, remains a challenge.
Notably, the textile, chemicals, and electronics sectors have.
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Commentary
“Private consumption and growth in emerging markets, particularly in Asia, have played a crucial role in sustaining global economic growth throughout 2023.
However, the recent surge in energy and food prices is a growing concern, and this is a trend that demands our vigilant attention.
The global economy is now believed to be past the peak interest.
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Do countries need sovereign credit ratings?
Subdivisions of countries sometimes issue their own sovereign bonds, which also require ratings.
However, many agencies exclude smaller areas, such as:
a country's regions provinces or municipalities.
Investors use sovereign credit ratings as a way to assess the riskiness of a particular country's bonds. ,
Eastern Europe & Central Asia
While the Eastern European economies have slowed down considerably as compared with 2022 and are feeling the brunt of Europe-specific recessionary winds, they are still relatively better off, with most economies registering growth in 2023 and recovery is likely for the others in H1 2024.
Eastern European countries are witnessing strong trade surplu.
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Introduction
Central banks globally were rather busy at the end of Q3 2023.
And what transpired was that the European Central Bank (ECB) chose to deliver its last blow in the fight against inflation before growth concerns take precedence; the Bank of England (BoE), in a reversal of fortune, opted to pause its tightening cycle, primarily in response to a weak in.
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Latin America & Caribbean
Latin America is currently at the forefront of an easing cycle as central banks in the region respond to decreasing inflationary pressures.
In the wake of the global surge in inflation during 2021, many Latin American central bankers took proactive measures to raise interest rates, even before the Fed began its tightening cycle.
Now, as inflation s.
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Middle East & North Africa
The short-term economic prospects for the Middle East and North Africa (MENA) region have deteriorated compared with our previous assessment.
This decline can be primarily attributed to downward revisions from earlier expectations in growth forecasts for major oil-exporting nations, especially Saudi Arabia, which have had a cascading effect on the .
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North America
North America’s regional outlook is maintained as ‘stable’.
The region’s economic landscape remains a tale of contrasting fortunes.
At the forefront of regional growth, the U.S. economy has demonstrated remarkable resilience, but Canada finds itself moving toward an economic slowdown.
The monetary policies of both the U.S.
Federal Reserve and the B.
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The Nordics
The Dun & Bradstreet Global Business Optimism Insights survey indicates that the worst is probably over for Sweden, with an improvement in the business optimism, financial confidence, investment confidence, and supply chain confidence indices.
Norway’s optimism is still sliding, indicating continued pain ahead.
The inflation scenario in the region .
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Western & Central Europe
Activity in Western Europe has been weakening through Q3, while underlying inflation remains high.
At the September ECB meeting, policymakers considered that above-target inflation took preference over sluggish growth and raised key policy rates by 25 bps.
However, the central bank has set higher standards for further rate hikes, implying that busi.
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What is country risk?
Country risk most often refers to the possibility of default on locally issued bonds.
The United States is considered the benchmark for low country risk.
Analysts may refer to MSCI Indexes, OCED reports, or rating-agency reports for help in analyzing country risk.
Country risk is critical to consider when investing in less-developed nations.
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What is sovereign credit risk?
Sovereign credit risk, which is reflected in sovereign credit ratings, represents the likelihood that a government might be unable—or unwilling—to meet its debt obligations in the future.
Several key factors come into play in deciding how risky it might be to invest in a particular country or region.
