Top 2024 macro-credit risks include tight liquidity and funding conditions, uncertainty about China’s macroeconomic outlook and property sector, and geopolitical event risk, said Fitch Ratings recently.
Despite recent data signalling continued disinflation in major developed economies, the continued resilience of the US consumer could yet lead to an ‘even-higher-for-even-longer’ interest rate scenario should demand data be stronger than expected and exceed central bank forecasts, the credit rating agency noted.
A further ratcheting higher of US interest rates would intensify financial condition tightening, raising asset-quality pressures and increasing the risks of a stress event in the financial system, the firm said.
This would notably contribute to the divergence in ratings trajectories between higher-rated issuers and more leveraged issuers at the lower end of the spectrum, the firm added.
Property crisis in China not only remains a key risk for the country's economy but also becomes part of the top 2024 macro-credit risks.
The property crisis feeds through to consumer demand and investment while pressuring local government financing vehicles and increasing asset risks within trust products, Fitch pointed out.
Policy support has increased since the summer, though there remains a high degree of uncertainty as to whether it will be sufficient to begin a recovery in the property sector, the firm added.
Fitch said its global key risks have been updated to include rates, asset valuations and financial stability; geopolitics, governance and policy risks; China property & macro; and real estate.
