Fitch Ratings:  Emerging Market Ratings Remain Under Downward Pressure


There have been only three emerging-market (EM) sovereign downgrades so far in 2021, well below the pace seen in 2020, but no foreign currency rating upgrades. Negative Outlooks exceed Positives by 21, signalling that further downgrades are likely this year. But the balance has improved by seven so far in 2021, Fitch Ratings says in a new report.



A record 47% of EM ratings are in the ‘B’, ‘C’ or ‘D’ categories, with 12 rated below ‘B-’.


Fitch believes that fragile frontier markets are most exposed to taper tantrum risks, but a systemic EM shock is unlikely. Most large EMs have smaller current account deficits (CADs) than in 2013 and the macro-financial backdrop is generally more favourable. Nine EMs will run CADs of 10% of GDP or more this year, but fewer have CADs above 5% than in 2013.


However, median EM total government debt rose to 62% of GDP at end-2020 from 34% at end-2012, making EMs more sensitive to higher global and local interest rates. There is also a long tail of weaker, less prominent frontier markets that have high levels of vulnerability, including high FC debt-to-GDP, exposing them to depreciation against the US dollar.


The report covers our responses to topical questions from investors on: China, Vietnam, Pakistan, Brazil, Bolivia, Costa Rica, Turkey, inflation risk in CEE sovereigns, Armenia, Gulf Cooperation Countries, Ghana, Sub-Saharan African growth prospects and the rating impact of official support measures for low-income countries.


The full report, “What Investors Want to Know: Emerging-Market Sovereigns – 2Q21”, is available at the above link or at


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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and and has contributed to the financial daily Referans and the liberal daily Radikal.