Fitch says Jamaica, Ukraine most at risk from inflation
Which threatens investor confidence
Jamaica, Ukraine and Kazakhstan are most at risk from rising inflation which threatens investor confidence in their local-currency assets, Fitch Ratings said on Tuesday, according to Reuters.
The ratings agency said rapidly rising consumer prices were threatening the credit-worthiness of emerging economies and the impact of higher energy and food prices was exacerbated by the reluctance of some emerging markets to allow nominal currency appreciation.
"Failure to contain inflationary pressures risks undermining macroeconomic stability and medium-term growth prospects. In the worst case scenario, investors will lose confidence in local currency assets leading to volatile financial and currency markets," the ratings agency said in a statement.
Among the 73 emerging economies it rates, Fitch identified Bulgaria, Suriname, Latvia, Lithuania, Ghana, Vietnam and Sri Lanka as highly vulnerable to inflation shocks based on the degree of their domestic overheating and monetary conditions.
Fitch said emerging Europe featured prominently among the most at risk economies because significant economic imbalances there have been fuelled by rapid private credit growth.
"Russia is also the most vulnerable of the BRICs (Brazil, Russia, India and China) by a wide margin," it added.