The Asia-Pacific Sovereign Seesaw: If Oil Prices Soar, Some Ratings Could Fall

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The Asia-Pacific Sovereign Seesaw: If Oil Prices Soar, Some Ratings Could Fall

Tensions in the Middle East are likely to keep oil prices elevated in the near future despite recent declines. Most observers don’t expect the U.S.-Iran standoff to escalate into conflict. Even so, it has already begun to hurt economically. A widely expected weak year for economic growth now has the potential to worsen. A further large increase in crude oil prices would adversely affect most Asia-Pacific economies. If prices stay above US$150 for more than a year, some sovereigns in the region could be downgraded.

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