Moody’s has negative outlook for global sovereigns

The outlook for global sovereign creditworthiness in 2020 is negative, according to a new report from Moody’s Investors Service.

“A disruptive and unpredictable domestic political and geopolitical environment is exacerbating the gradual slowdown in trend GDP growth, aggravating longstanding structural bottlenecks and increasing the risk of economic or financial shocks,” Moody’s says.

Specifically, the report points to the volatile relationship between the United States and China on trade as an example of the sort of uncertainty that’s weighing on its outlook for global sovereigns.

“The starkest manifestation of the impact of geopolitical tensions is the disruption to trade, mainly resulting from the standoff between the U.S. and China. The antagonistic political environment is also weakening global and national institutions, lowering the shock-absorption capacity of sovereigns with high debt burdens and low fiscal buffers,” the report says.

Overall, Moody’s sees the global environment becoming “less predictable” for the 142 sovereigns that it rates.

“Event risk is rising, raising the spectre of reversals in capital flows that would crystallize vulnerabilities facing the weakest sovereigns,” Moody’s says.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.