Southeast Asia's sovereign ratings face risks from the Middle East conflict, with persistent energy disruption to weigh on their fiscal and external metrics, S&P Global Ratings said in a Tuesday release.
Economies reliant on imported energy could see strains in their robust growth outlook under severe long-term effects of the war, limiting economic support for ratings in South and Southeast Asia, credit analyst Rain Yin said.
Damage to the energy infrastructure in the Middle East will prolong the normalization of oil and gas production levels even with the reopening of the Strait of Hormuz, S&P said.
Southeast Asian sovereigns with weaker rating buffers could see their credit quality drop under persistent energy market disruption, with government subsidies for consumers and businesses possibly increasing, Yin said.
The depth of the damage to sovereigns' fiscal positions will depend on the ability of governments to reduce expenses or delay spending plans, S&P said.