The ongoing military conflict involving Iran, the United States, and Israel could pose a serious threat to the financial stability of emerging market economies, according to Fitch Ratings, an international credit rating agency.
In a report titled “Iran conflict poses new credit risks for emerging markets,” Fitch notes that countries heavily dependent on energy imports may face significant challenges if energy supplies from the Gulf region are disrupted.
The agency emphasizes that rising energy costs could intensify financial pressure and worsen balance of payments conditions in affected countries.
According to the report, such developments could also weaken global investor confidence. This, in turn, may directly impact foreign remittances, exchange rates, and the ability of emerging market economies to secure international financial assistance.
Fitch further states that central banks around the world may be compelled to tighten monetary policies in order to control inflation triggered by higher energy prices.
The report also predicts that the conflict could contribute to further strengthening of the US dollar while weakening international debt issuance markets.
Large economies such as India, which allocate more than 3% of their Gross Domestic Product (GDP) to fuel imports, are also expected to be directly affected by rising global energy prices.
Fitch Ratings concludes that countries with more vulnerable economic structures face heightened risks due to the growing interaction between geopolitical tensions and economic stability.
