Geopolitical Tensions Raise Emerging Market Credit Risks in 2026
Geopolitical risks, including those related to shifting US foreign policy, could have ramifications for emerging-market borrowers in 2026, Fitch Ratings says in a new report.
Fitch said potential pressures stemming from geopolitical events are among the risks to its base-case expectation that the macro-credit environment for emerging markets this year will be net neutral relative to last year.
According to the rating agency, the US removal of Venezuelan leader Nicolas Maduro in early January could have a powerful demonstration effect on Latin American and potentially other countries’ orientation towards the Trump administration’s priorities.
It added that transatlantic tensions over Greenland have compounded geopolitical risks in Eastern Europe, amplifying defence spending pressures and potentially making tail-risk scenarios relating to further Russian aggression more likely.
“Our ‘neutral’ baseline view reflects prospects for broadly unchanged global GDP growth, further central bank policy interest rate cuts, reduced (albeit still high) uncertainty over US tariffs compared with last year’s extreme volatility, and moderate gross financing needs.
“We have not altered our baseline oil price assumptions due to the US action in Venezuela or unrest in Iran, as we expect global oversupply to cap the geopolitical risk premium”, Fitch said.
Lower oil prices can support energy importers’ sovereign credit metrics but can be a key risk for exporters with high commodity dependence, Fitch added.
It highlighted that high gold prices in response to geopolitical uncertainty can support reserves, but movements in other asset prices may have a larger impact.
Funding and liquidity conditions could remain broadly favourable for emerging market issuers in 2026. However, the contrast between buoyant financial markets and uncertainties around global growth, trade and geopolitics could heighten the risk of volatility.
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