Moody’s sovereign outlook for 2023 is negative

High prices, slow growth intensify social risks

Share of ratings on negative outlook exceeds share of ratings on positive outlook

(as of November 2022)

Sovereign downgrade rate has declined to historical averages but exceeds upgrade rate

(# of rating actions as percentage share of the sovereign rating universe)

Credit conditions will be difficult, especially for frontier markets and countries reliant on external financing:

» The spillovers from Russia’s invasion of Ukraine hit many countries still recovering from COVID-19, creating a “shock upon a shock”

» High energy and food prices still weigh on energy and food importers and raise social and political risks

» Slow global economic and trade growth will challenge economies reliant on export-led growth models

» Tight financial conditions and market volatility will mean “stop and go” market access for sovereigns under credit stress

» Higher US interest rates and the strong dollar will raise debt-servicing costs on foreign-currency debt

*The 145 figure includes Russia, the rating for which was withdrawn during 2022. Source: Moody's Investors Service, Sovereigns – Global: 2023 credit outlook is negative as high prices, slow growth intensify social risks, 14 November 2022

Non-investment grade: 7.0%