China’s growth is projected to ease to 4.1 per cent from 4.8 per cent in 2025, weighed down by weak price dynamics, a protracted property downturn, and subdued consumption. Fiscal consolidation across the region is expected to be modest, even as around half of Asia Pacific (APAC) sovereigns should see improved balances. Fiscal risks have nonetheless increased as governments introduce measures supporting jobs and households, Fitch Ratings said in a non-rating action commentary.
The region’s median government debt is forecast to rise to 50.1 per cent of gross domestic product (GDP) in 2026, up from 49.1 per cent in 2025 and 46.8 per cent in 2024, with more than a quarter of sovereigns likely to record debt increases exceeding two percentage points (pps) of GDP.
Geopolitical tensions are expected to stay elevated through 2026, while domestic pressures could resurface following widespread protests in 2025 over political corruption, cost-of-living concerns, and limited economic opportunities for the youth.
Most APAC sovereign ratings carry Stable Outlooks heading into 2026. Thailand remains the only sovereign on a Negative Outlook, reflecting mounting fiscal risks stemming from prolonged political uncertainty and persistent growth challenges. The regional landscape follows a 2025 downgrade of China and upgrades for Pakistan and Uzbekistan.
ALCHEMPro News Desk (SG)
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