This shocking report came for India amidst Iran-US war at a dangerous juncture and Trump’s threat.

Middle East Tensions: Due to increasing tension in West Asia, the situation is continuously worsening. Hundreds of people have lost their lives so far in the joint attacks by America and Israel and counter-attacks by Iran. Crude oil prices are increasing rapidly and for the first time after the year 2022, crude oil has crossed the $100 mark and reached around $114 per barrel. Meanwhile, a report by rating agency Fitch is giving worrying signs for many emerging economies including India.

Fitch’s shocking report

In its report, rating agency Fitch said on Monday that due to the war situation related to Iran, emerging economies may face additional challenges in areas such as oil and gas imports, foreign exchange remittances by NRIs and exchange rates. The report, titled ‘Iran conflict poses new credit risks for emerging economies’, said that if there is greater disruption to global energy supplies from the Gulf region than expected, it could have a serious impact on global investor sentiment.

According to the report, in such a situation, the US dollar may strengthen further, which will make it difficult for high-risk borrowers especially to raise loans in the international market. Fitch also said that the increase in energy prices will increase pressure on inflation and may also impact monetary policy decisions around the world.

serious impact of the long war

Fitch’s report further states that the most direct impact of this war will be on oil and gas imports. In a large economy like India, net fossil fuel imports amount to about 3 percent or more of gross domestic product (GDP). According to the rating agency, if oil and gas transportation through the Strait of Hormuz is disrupted for less than a month and there is no major damage to the region’s oil production infrastructure, the risk to the creditworthiness of emerging economies may remain limited.

However, if this disruption continues for a long time, its impact can be much more serious. The increase in the cost of imports will put more pressure on countries like Pakistan whose financial condition is already weak or whose current account deficit is high. The report also said that if energy prices remain high for a long time, there could be increased fiscal pressure on governments that subsidize fuel to provide relief to consumers or implement new relief schemes in response to rising prices.

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