Fitch Ratings has flagged that emerging market (EM) issuers will face “greater macro challenges” in 2026 due to slower growth, higher trade barriers and external shocks.
The agency forecasts global emerging-market GDP growth will fall to about 3.7 % in 2026, down from 4.1 % this year. This slowdown comes as the ripple effects of elevated U.S. tariffs, currency strains and trade diversion bite across developing economies.
Fitch points out that while near-term liquidity in many emerging markets remains fairly robust—thanks to ongoing monetary easing—the structural backdrop is shifting. The trade shock from the U.S., for example, has driven effective tariff rates to estimated highs of 36% for India, 27% for Brazil, 22% for Indonesia and 19% for Vietnam.
With spreads on high-yield EM issuers already compressed relative to historical norms, Fitch warns that any deterioration in investor sentiment could lead to “significant widening” of spreads and a tougher funding environment.
For corporate borrowers in emerging markets, this means higher risk of refinancing stress, tighter external funding and greater vulnerability to currency and commodity shocks. Observers say stronger policy frameworks and diversified funding sources will be key in navigating the headwinds ahead.
Governments, banks and borrowers are now being advised to prepare for a less-forgiving environment in 2026—where growth is weaker, margins are thinner, and external buffers are more essential.
