Outlook for global sovereigns negative in 2017 - Moody's

The US-based credit ratings agency, Moody's Investors Service in their latest report on the global growth outlook published on Monday said that the outlook for sovereign ratings globally for the coming 12 to 18 months is negative.

Moody's noted that a combination of continued low growth, shift towards fiscal stimulus that will increase already high public sector debt, and rising political and geopolitical risks will remain the key drivers of the negative outlook.

According to Moody's latest publication, 26 percent of Moody's 134 rated sovereigns currently carry a negative outlook, compared to 17 percent a year ago, the largest proportion since late 2012. The share of sovereigns with a stable outlook has fallen to 65 percent from 75 percent last year, while 9 percent have a positive outlook, similar to last year with 8 percent.

"One of the key credit constraints for most rated sovereigns is the persistently low growth environment," said Alastair Wilson, Moody's Managing Director -- Sovereign Risk. "Monetary policy's ability to support growth in advanced economies is diminishing, and in many emerging markets it is constrained by above-target inflation and exchange-rate pressures. So we are seeing a gradual but broad-based shift in policy towards loosening fiscal policy in order to lift growth".