Economic News

As challenging as France’s fiscal and political outlooks are, the country’s underlying areas of resilience include a favourable government debt profile, a resilient economy and well capitalised banks.

Germany needs a stable and reform-oriented government to respond to the impact of US president-elect Donald Trump’s potential policy shifts that will impact Germany’s trade, fiscal and defence policies.

Donald Trump’s emphatic victory in the US presidential elections is a net negative for US risks over the medium run because it raises financial risk, although nearer-term implications for the economy are more mixed.

Questions remain over the UK autumn budget’s ability to meaningfully boost long-run economic growth. The easing of budgetary constraints and reduced monetary flexibility pose economic risks.

Greece’s favourable credit trajectory is underscored by falling public debt, more resilient banks, and structural reforms. Scope Ratings’ baseline is for primary budget surpluses to be sustained in coming years.

Georgia’s coming elections highlight its tough balancing act between the West and Russia. Competing visions for the nation’s future, challenging geopolitics and sanctions risks threaten the sovereign’s ratings.

Italy aims to accelerate fiscal tightening to exit the Excessive Deficit Procedure earlier than expected, but high public debt, structural economic weaknesses and unfavourable demographics pose challenges.

The US and global economies remain resilient ahead of forthcoming US elections. However, Europe’s economic fragility poses challenges for its recovery despite support from the easing of interest rates.

Germany is facing demographic challenges with more acute structural pressures than other advanced economies. Labour-market and pension reforms are essential, but fragmented politics risk are eroding competitiveness.

Türkiye’s restrictive monetary policy continues to drive disinflation, bolster external accounts and replenish official reserves, improving the economic outlook despite persistent inflation and a wide budget deficit.

Political deadlock in Germany and France limits the prospect of implementing reforms proposed by the Draghi report, which, together with Southern Europe’s productivity gap, challenges Europe’s growth outlook.

Political uncertainty, a challenging fiscal outlook, and the rising divergence in funding conditions between France and other core euro area sovereign borrowers underscore the importance of political stability.

The German government is maximising the modest leeway it has under the debt brake to inject public funds into the economy, but the measures are insufficient for addressing large and widening investment gaps.

The proportion of Italian sovereign debt held by foreign investors, a less stable source of demand than the ECB and residents, is rising and will make Italy more susceptible to changes in market sentiment.

Egypt’s public finances remain vulnerable to external shocks given the government’s limited fiscal space, though external support, higher foreign direct investment and progress on reforms are improving resilience.

A hung parliament in France mitigates risk of significant fiscal slippage due to the policy agendas of the far right or radical left. Still, reform momentum will likely stall given the need for compromise.

The Labour Party won a landslide victory in Thursday’s UK general elections but long-run challenges will endure, including dealing with rising debt and reviving the economy while hitting fiscal targets.

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.