Moody's: Outlook for global sovereigns is stable; growth tempers high debt, geopolitical tensions

  • healthy growth and synchronized global economic expansion of 2017 likely to continue into 2018

"The benign state of the global sovereign credit environment is reflected in the fact that almost three-quarters of Moody's-rated sovereigns currently hold a stable rating outlook, while the increasingly solid momentum in growth balances against the continuing risks from high debt levels as well as from elevated geopolitical tensions," says Alastair Wilson, Moody's Managing Director for Global Sovereigns.

More:

  • expects global GDP growth in 2018 to remain over 3% in 2018, similar to 2017

Challenges

1. domestic political uncertainty and social tensions weaken the commitment to economic and fiscal reform

  • There is progress on this front, with ongoing labor market reforms in a number of European countries as well as in Japan

2. public debt levels will also remain high, although at generally stable levels

3. heightened geopolitical risks have a higher profile than in recent years and could potentially undermine the stable outlook for sovereign credit

  • The probability of a military conflict in the Korean peninsula has risen
  • and tensions have escalated in the GCC region
  • The trade policies of the US continue to pose a risk to growth
  • And while anti-consensus political movements have not gained the electoral the traction in western Europe that was feared at the start of the year, the potential for destabilizing political events remains