Fitch turns bearish on global sovereigns — and the Middle East is taking the hardest hit

Fitch turns bearish: Fitch revised its 2026 global sovereign sector outlook to “deteriorating” from the “neutral” stance held in its late-2025 report, citing the economic and security fallout from the US-Iran war, according to the ratings agency’s mid-year outlook report shared with EnterpriseAM. The revision covers every major region Fitch tracks (except for China) — and the Middle East bears the brunt of the damage.

Ratings watch for most in the region, including Qatar and Ras Al Khaimah, has turned negative, with no positive outlooks regionwide, Fitch says.

The agency’s base case is where the Strait of Hormuz begins to reopen around July on the back of a US-Iran understanding, with oil production recovering quickly, given that infrastructure has largely escaped serious damage. Brent is now penciled in at USD 87 / bbl for 2026, up sharply from USD 68.3 / bbl last year — a windfall for Gulf exporters but a headache for import-dependent economies like Egypt and Jordan in the broader region.

This is despite GCC ratings remaining resilient so far through the war. “Most GCC sovereign ratings have been resilient to the war due to generally very strong sovereign balance sheets backed by alternative export channels (Oman, Saudi Arabia and UAE/Abu Dhabi) or prospects for additional support (Bahrain),” Paul Gamble, head of Middle East/Africa sovereigns at Fitch, said.

The outlook is still pretty bleak for the region: “Security conditions will continue to test this near-term resilience and there will be a lasting adverse impact on the security and business environment,” Gamble said.

THE CLOSING BELL-

The EGX30 fell 2.1% at yesterday’s close on turnover of EGP 10.8 bn (28.1% above the 90-day average). Local investors were the sole net buyers. The index is up 22.5% YTD.

In the green: Orascom Construction (+1.2%).

In the red: Raya Holding (-7.0%), Qalaa Holdings (-6.7%), and Kima (-5.3%).