Fitch Ratings expects Asia-Pacific sovereigns to have a neutral outlook in 2026, based on established buffers that should counter rising US tariffs and slowing demand from China, according to a recent release.
Reduced import demand from the US and China will likely weigh on the region's non-tech exports, although AI-related trade continues to provide a cushion, Fitch said.
The rating agency expects China's economic expansion to weaken to 4.1% amid a dampened property sector and slower consumption.
Fiscal risks are mounting as governments lay out support for households, with the region's median debt-to-GDP ratio forecast to climb to 50.1% from 49.1% in 2025, the rating agency said.
Fitch also believes social unrest and geopolitical friction will continue to be elevated next year.
While the broader region remains to have a stable outlook, Thailand stands as the only sovereign with a negative outlook due to political headwinds, Fitch said.
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