The mid-year review of Fitch Ratings’ 2025 sector and structured finance asset performance outlooks revealed a material deterioration in our expectations for key sectoral credit drivers since the beginning of 2025. Of 288 outlooks, 57 were revised with all but one in a deteriorating direction.
Trade and tariff uncertainty, weaker economic growth forecasts, sustained high U.S. interest rates and inflation, and geopolitical risks were key themes in Fitch’s mid-year outlook updates. Our core macroeconomic forecasts have materially worsened since end-2024, with U.S. tariff-related trade uncertainty weighing on the outlook for investment and demand. While most sector and asset performance outlooks remain neutral, 29% are now ‘deteriorating’ and only 3% ‘improving’, compared to just 10% ‘deteriorating’ at the start of the year.
Six of eight sovereign regions have ‘deteriorating’ outlooks, reflecting weaker economic growth forecasts linked to increased tariffs and policy uncertainty. Latin America and Middle /North Africa are the exceptions with ‘neutral’ outlooks.
Fitch’s non-financial corporates key credit metric projections have declined along with our weaker economic outlook, with broadly lower aggregate revenue and profitability forecasts. More than half of our global corporates sectors have ‘deteriorating’ outlooks, with the aerospace and defense outlook a notable exception remaining ‘improving’.
Several bank, non-bank financial institution and insurance sector outlooks were revised to ‘deteriorating’. Financial institution sectors with greater exposure to trade-related economic downturns were most likely to be changed.
More than one-third of structured finance sectors have deteriorating asset performance outlooks with weaker macroeconomic conditions negatively affecting our expectations.
Sector outlooks are a general forward-looking assessment of the underlying operational and business conditions of the sector compared to the previous calendar year. Asset performance outlooks indicate our expectations for asset performance in a given structured finance sector. Subscribers can access the full list of 288 sector and structured finance asset performance outlooks through the link above.
Source: Fitch Ratings
