Euro area governments unable to put in place consistent medium-term fiscal plans face credit-rating pressure even though reducing public borrowing is possible, including for highly indebted countries.

After five years of near-zero cumulative growth since the pandemic, Germany’s economic recovery is unlikely to accelerate without adequate policy reform and an increase in net investment, supported by its significant fiscal space.

A full-scale Middle-East conflict is unlikely but any further escalation of tensions would have significant adverse consequences for commodity markets and inflation, affirming geopolitical developments as a core credit challenge globally.

Japan’s sovereign Outlook was revised to Stable from Negative on 22 March due to higher inflation and its positive effects on debt sustainability. Very high levels of public debt, weak growth and rising ageing-related costs remain constraining factors.

The setback for Türkiye’s ruling AKP party in local elections could support a continued restrictive monetary policy stance as persistent high inflation, an important credit weakness, was a key driver of the electoral outcome.

France faces important fiscal, social and political hurdles to finding additional savings in the next four years, challenging the timely execution of its medium-term fiscal consolidation strategy ahead of the 2027 elections.

Georgia’s recently-affirmed sovereign ratings are anchored by a robust public-debt structure, declining government debt and strong growth. Still, heightened geopolitical risk and persistent domestic institutional challenges are core rating constraints.

Inconclusive elections in Portugal, marked by an extreme right-wing party’s emergence as the third largest in parliament, have led to a minority coalition administration taking office. Finding consensus on reforms and fiscal policies will be challenging.

Egypt has improved its near-term finances by attracting foreign investment, devaluing the pound and securing more IMF support, but converting those gains into more sustainable long-term economic policy remains central for reversing the rating trajectory.

Spain's polarised national politics, evident in the lack of consensus for approving this year’s budget, could compromise the country's robust economic growth momentum. Enhancing productivity is crucial to offset rising welfare spending and pension costs.