Moody's: Tariffs and trade uncertainty increase credit risk in the Asia-Pacific region

Tariffs and uncertainty over global trade have increased credit risk in the Asia-Pacific region, according to Moody's Ratings, which downgraded the region's sovereign credit outlook from stable to negative. Tariffs pose long-term credit risk to some Asia-Pacific economies, hurting their attractiveness and dampening foreign investment. Fiscal spending is likely to increase to help economic growth and slow or stop fiscal consolidation. Falling revenues - especially for trade-intensive countries - will further limit flexibility, while widening deficits will raise borrowing needs. If tariffs are significantly reduced in trade talks, Moody's will bring the outlook back to stable. Conversely, escalating tariffs, sharply rising interest rate spreads or continued geopolitical conflicts will make the situation worse. (Jin Ten)