The Federal Reserve of the United States, by adopting tighter policies and increasing yields on government bonds in developed economies, is likely to create pressures on emerging markets. These conditions could increase borrowing costs and lead to capital outflows from these countries.
Fitch Ratings Forecast
According to the latest analyses from Fitch Ratings, this global rating agency, emerging market economies may face tougher financing conditions, despite showing resilience in recent quarters. Fitch has noted that "credit resilience in emerging markets will be challenged by the Federal Reserve's tighter policies and rising yields on bonds in developed markets. This situation will require attention to the stability of macroeconomic policies and the credibility of reforms."
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Growth Outlook and Challenges Ahead
Fitch has also predicted that financing conditions in most emerging markets will improve by 2027, as global inflationary pressures ease and central bank concerns diminish. The agency stated: "Our forecast is that financing conditions in most emerging markets will be more positive by 2027, but there are significant risks to our assumptions."
Countries that are heavily reliant on borrowing in foreign currencies may experience additional pressures, especially if rising yields on bonds in developed economies lead to investor outflows from emerging markets. Fitch believes that growth in emerging markets, particularly in 2027, excluding China, will reach 3.3 percent, down from the 3.6 percent forecast for 2026.
The agency also pointed to risks arising from potential adjustments in AI-related investments, which have supported exports and economic activities in some regions of Asia. Specifically, Fitch's analyses indicate that a sharp decline in AI-related stock prices could reduce growth in emerging markets by up to 0.8 percent compared to its forecasts for 2027.
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