Economic News

France’s planned consolidation of its public finances risks being deferred, considering the likely outcomes of legislative elections, with consequences for the EU policy agenda and, potentially, investor sentiment.

Higher-for-longer rates heighten the stakes for sovereign debt sustainability especially as financial-market and institutional checks on the borrowing of rich countries are weaker than they were several years ago.

A sustained period of higher interest rates will present a challenge for many borrowers worldwide, as economies adapt to a new era of comparatively tight monetary policy amid a recovery in growth and enduring inflation.

South Africa faces a period of greater political fragmentation and reduced governability, adding pressure in the face of rising economic, social and fiscal challenges that need to be addressed by the next government.

The challenges of dealing with rising debt and gradual de-dollarisation, which might both accelerate after this year’s presidential election, constitute growing pressure points for the sovereign rating of the US.

The UK likely faces rising public debt after coming general elections, given a lack of priority to change policy. Even though the UK benefits from significant debt tolerance, rising debt poses a long-term rating risk.

Italy’s government needs to devise a credible medium-term fiscal consolidation plan to stabilise public debt given challenges of high interest costs, excessive past tax incentives, and delays in recovery plan spending.

Euro area governments unable to put in place consistent medium-term fiscal plans face credit-rating pressure even though reducing public borrowing is possible including for highly indebted countries, says Scope Ratings.

After five years of near-zero cumulative growth since the pandemic, Germany’s recovery is unlikely to accelerate without policy reform and an increase in net investment, supported by its significant fiscal space.

A full-scale Middle East conflict is unlikely but any further escalation of tensions would have significant adverse consequences for commodity markets and inflation, affirming geopolitical developments as a core economic challenge globally.

Japan’s sovereign Outlook was revised to Stable from Negative by Scope Ratings on 22 March due to higher inflation and its positive effects on debt sustainability.

The setback for Türkiye’s ruling AKP in local elections could support a continued restrictive monetary policy as persistent high inflation, an important economic weakness, was a key driver of the electoral outcome.

France faces important fiscal, social and political hurdles to finding additional savings in the next four years, challenging the execution of its medium-term fiscal consolidation strategy ahead of 2027 elections.

Georgia’s credit outlook is anchored by a robust public-debt structure, declining government debt and strong growth. Still, heightened geopolitical risk and domestic institutional challenges are core constraints.

Egypt has improved its near-term finances by attracting foreign investment, devaluing the pound and securing more IMF support, but sustainable economic policy remains central for reversing the rating trajectory.

Italy’s public debt of around 137% of GDP is unlikely to decline despite expected primary surpluses from 2025 and planned asset sales, underpinning need for deploying EU funds successfully and containing spending.

Further upside for Greece’s credit rating hinges on robust nominal growth, deeper fiscal consolidation, more reform of the banks and structural reform compensating for years of public and private under-investment.

In this report, we intend to dwell deeper into the prospects of the Israeli economy in the short-term.

Germany’s energy-intensive industries, low investment, ageing population and weak growth, rather than high government debt, represent challenges to its AAA credit rating – hence the need to reform the debt brake.

Scope Ratings is projecting a rebound in CEE-11 growth from an estimated, weak 0.7% in 2023 to 2.5% this year and 3% in 2025. Growth will be driven by lower inflation and higher real wages.