Fitch: Global sovereign rating outlook improves, but high debt lingers

The US-based ratings agency, Fitch Ratings, published its 2017 Mid-Year Sovereign Review and Outlook, highlighting the following points:

Global sovereign credit cycle reached an inflection point at the end of last year and has turned less negative in 2017

Unlike the 2013 "taper tantrum", there has been no sign of disruption to emerging market capital flows associated with the Federal Reserve tightening, and Fitch does not expect any such disruption in the immediate term

Higher-than-usual policy uncertainty remains in developed markets. It is still unclear whether Europe’s political setting can deliver the much-needed structural reforms to support growth

Despite clear upward global growth momentum, most sovereigns are forecast to see deteriorations in their primary fiscal balances (balances excluding interest rates) in 2017 following four consecutive years of general improvements.

This is attributed largely to waning political support for additional fiscal tightening in developed markets, and policymakers in a number of emerging market sovereigns still struggling to cope with the downward adjustment in commodity prices