Fitch Warns: Iran Conflict Threatens Emerging Markets with Energy Shocks, Remittance Cuts and Soaring Debt Costs
Escalating conflict between the United States, Israel and Iran is set to create fresh credit risks for emerging market sovereigns, with energy-importing nations facing the biggest threat from higher oil prices, disrupted remittances and tighter global financing conditions, Fitch Ratings has warned. In a report titled “Iran Conflict Raises New Credit Risks for Emerging Market Sovereigns,” released on March 6, the global credit rating agency said the crisis — triggered by US-Israeli strikes on Iran on February 28 and subsequent Iranian retaliation — could ripple far beyond the Middle East.06a98c “Oil and gas imports are the most direct channel for contagion from the conflict,” Fitch stated, noting that net fossil-fuel imports already equal 3% or more of GDP in several large emerging economies, including India, Egypt, Pakistan, the Philippines, Thailand, Chile, Morocco and Ukraine. Countries with stretched public finances or large current-account deficits — such as Pakistan and Ukrai...