Global | Country Risk Annual Report 2025

Overall, the past year has been positive in terms of the evolution of macroeconomic, fiscal and financial vulnerabilities in most countries globally.

Key points

• Key points:
• This year was characterized by low or stable macroeconomic and fiscal vulnerabilities, sustained growth, and "helpful" inflation leading to a decline in private and public debt ratios, decreasing interest rates in the second half of the year, and low risk premiums.
• On the private sector side, debt gaps levels (outstanding debt ratios vs. estimated equilibrium) have decreased or stabilized overall due to the high nominal GDP levels (powered by inflation) seen in the last couple of years, but still remain elevated in some Advanced Economies (AE).
• Real housing prices gaps (vs long-term equilibria) have picked up during the year and are currently at warning levels in several AE. Northern Europe, Portugal and Türkiye present the highest disequilibrium levels. China’s disequilibrium is finally receding.
• Special Topic: we analyze the impact of compliance with fiscal rules under the Stability and Growth Pact (SGP) on sovereign spreads in the EU27, revealing narrowing effects of fiscal rules compliance on risk premiums, particularly through deficit and debt rules. We also identify non-linear effects related to debt-to-GDP ratios and the business cycle, showing that compliance has a more pronounced effect in highly indebted countries during economic expansions.

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