OREANDA-NEWS. February 02, 2015. Fitch Ratings has published its bi-annual global Credit Outlook report, an overview of our outlook across all rated sectors and regions.

Rating Outlooks stabilised in 2014 across most sectors, led by sovereigns. The exception to this trend is financial institutions, as the reduction in sovereign support for banks will lead to downgrades in 1H15, despite the widespread improvement in capitalisation. Most sectors also showed a slight improvement in rating mix. The ratio of ratings in the 'AAA' to 'A' range rose marginally or remained stable across the board.

Fitch forecasts world GDP growth of 2.9% in 2015, up from 2.5% in 2014. However, our projections are lower than six months ago, reflecting weakening emerging markets and disinflationary tendencies in the eurozone. Global growth will be driven by a buoyant US economy, offsetting weaker growth in the eurozone, Japan and many large emerging markets (EM), including Brazil, China and Russia. The lower oil price should have a net positive impact on global growth as the propensity to consume is higher for net oil importing countries. In contrast, cheaper oil is broadly negative for EM, as aggregate net exporters of oil and other commodities, as well as for oil producers in general.

Differences in the speed of economic growth have resulted in divergent monetary policies. With policy easing in Japan and the eurozone but tightening in the US, the differences in stance sets the stage for heightened market volatility. Together with the stronger US dollar, this poses a challenge to many EM issuers' external funding.

We believe the risks to ratings in 2015 could come from M&A activity and geopolitical events. With liquidity plentiful, the gradually improving economic backdrop is driving acquisitions, in particular in the corporate sector, putting idiosyncratic pressure on ratings. Geopolitical tensions and sanctions from the Russia-Ukraine conflict and instability in the Middle East pose broader tail-risks.

The stabilisation of ratings and the stronger rating mix broadly reflects the overall improvement in the global growth picture. Fitch's ratings generally do not anticipate specific M&A and other event risks. These can only be brought into account upon their occurrence.