Recession Raising Fiscal Risks, But Defaults To Be Avoided

The most salient feature of our latest Sovereign Risk Ratings update is that we have become substantially more pessimistic towards Asia's economies, and are forecasting recessions in several key states in 2009. This will drive up fiscal spending, which may in turn prompt governments to borrow more from abroad. However, for the most part, we are not forecasting severe financing crises that could lead to defaults.

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