Asia Country Risk Ratings

Afghanistan (AFG)

Overall risk in the Islamic Republic of Afghanistan remains very high. Afghanistan is currently governed by the Taliban, who established an Islamic Empire after seizing power in August 2021.The Supreme Leader holds ultimate authority over all political, military and religious affairs across the region. Political violence, political interference and legal & regulatory risk all maintain a very-high risk rating following the most serious confrontation between Pakistan and Afghanistan since Taliban seized power in Kabul. In October 2025, Pakistan had carried out a strike on what it described as a ‘base of operations for terrorism’, which was then met with an unsuccessful ceasefire. Afghanistan and Pakistan have exchanged heavy fire following a series of air strikes, including an air attack on a drug-rehabilitation hospital in Kabul that reportedly killed more than 400 people. In terms of Afghanistan’s economic situation, the world bank indicates that GDP growth in 2026 is expected to grow modestly, at approximately 4 %, driven primarily by robust domestic demand and rising private investment, though this may now be lower due to the Iran war. Although the economy is showing signs of improvement, this growth does not reflect the country’s poor living standards and widespread low incomes. Inflationary pressures have intensified, with inflation climbing to 7.6% in March 2026 due to rises in food prices, supply constraints and volatile global commodity markets. The risk of doing business and supply chain disruption have both maintained a very high rating, despite Afghanistan increasing its fuel imports from both Russia and Belarus as the Iran War constrains potential supply. Lastly, exchange transfer and sovereign non-payment risk have both been re-affirmed at a medium-high risk rating.

China (CHN)

China’s overall country risk score remains at medium. The May visit of President Trump to China pleased China authorities, not only to showcase the meeting of two economic superpower but also in getting Trump to oppose Taiwanese independence.  The lack of a comprehensive trade deal is also not a concern in Beijing, as this is not a high priority with high U.S. reciprocal tariffs have been replaced by 10% Section 122 tariffs.  However, the risk of an invasion or blockade of Taiwan by China remains low in 2026 and 2027, given the high risks involved.  Even so, we assess China will continue to increase pressure on Taiwan to reunify via military exercise and pressure on other countries to isolate Taiwan. China authorities have also increased leverage over Russia, as Putin’s May visit failed to resolve the stalled start to build the 2nd natural gas pipeline (Power of Siberia 2) from Russia.  China continues to want more concessions on gas prices and flexibility of its gas purchases. The other main focus in 2026 is the economy, with the new 5-year plan placing emphasis on turning new technologies into production reality. While the 2026-31 plan also mentions the importance of households to economic resilience, the government did not launch a major cyclical handout for China consumers in the March budget.  Elsewhere, the exchange transfer risk remains at medium-high. A current account surplus, plus substantial FX reserves, help to support this rating. The inability to provide fiscal stimulus remains at medium. China has room for extra fiscal stimulation should lower growth raise the risk of a hard landing in 2026 or 2027, but if growth is 4.5-5.0%, then further stimulus will likely be small. Banking sector vulnerability has remained at a medium rating, as non-performing loans, primarily held by small and city banks, can be managed through potential takeovers by larger banks and local governments.

India (IND)

India’s overall rating remains at medium.  The U.S./Iran war is leading 2026 growth forecasts to be reduced below 7%, both due to high costs and the physical disruption of oil and oil products through the Straits of Hormuz. Higher crude and fertilizer prices are also gradually feeding into higher CPI inflation, despite some government controls.  Additionally, the 2026 monsoon has started weakly and concerns exists that this could remain weak due to a super El Nino in the pacific.  A weak monsoon would hurt rural income/consumption while also risk boosting food prices.  Even so, the impact of the two adverse forces is moderate rather than drastic in economic terms.  The government is trying to soothe the economy and the reserve bank of India (RBI) is reluctant to hike.  We foresee the RBI will continue to allow a gradual depreciation of the Indian Rupee by using FX intervention. The soft 2026 economic picture also means some slippage in fiscal consolidation, but a reduction in the high government debt/GDP picture remains the multi-year view.  This keeps the risk of sovereign non-payment capped and currently standing at medium-high. The banking sector is also in a reasonable situation, and this keeps the banking sector vulnerability risk at medium-low.    

Politically the BJP has done well in state elections including a victory in West Bengal.  This has prompted speculation that prime minister Modi may be convinced to stand for a 3rd time in the 2029 election. However, some tension exists among Gen Z voters over unemployment, which has generated a fake protest party – the Cockroach Janta party.  Additionally, voter concerns over restrictions to discourage fuel usage and overseas travel have also been seen.  These are likely temporary tensions, rather than serious threats.  Legal and regulatory risk and political interference measures are at medium.  

Indonesia (IDN)

Overall risk for Indonesia remains assessed as medium. The current President of Indonesia, Prabowo Subianto, assumed office in 2024, succeeding Joko Widodo. Former president Widodo aligned with citizen’s traditional values of protectionism of key industries and natural resources, which is a similar route President Subianto is attempting to follow. Political violence is still regarded to have a risk rating of medium high following last year’s deadly anti-government protests, while new investigations are examining widespread violations committed by security forces during these events. Additionally, President Subianto’s decision to expand the military’s role throughout the nation has created a slight opening for opposition parties ahead of the 2029 election, despite the governing coalition currently holding a dominant parliamentary majority. In terms of international relations, a security treaty between Australia and Indonesia had been signed early this year. Meanwhile, a recent meeting between President Subianto and President Vladimir Putin confirmed Indonesia’s securing of 150 mln barrels of Russian crude oil this year, amid energy shortages linked to the Middle East conflict. Political interference remains assessed as medium, while legal & regulatory risk is unchanged at a heightened medium-high rating.

According to the IMF, GDP growth is forecast at 5% in 2026 and 5.1% in 2027. Indonesia’s economy had seen its economy grow at its fastest pace in over three years, driven by strong domestic consumption and a surge of 21.8% in government spending.  However, several measures have been introduced since the Iran war, including a daily fuel limit of 50 liters per car and an urged reduction in work-related travel in both public and private sectors, in order to save millions in fuel subsidies. Inflationary pressures have risen with the IMF’s forecast of 3% in 2026. Therefore, the risk of doing business remains medium-high, while the government’s inability to provide stimulus is assessed as medium-low. In addition, the Bank of Indonesia’s FX intervention was necessary to maintain the rupiah’s stability. Exchange transfer and sovereign non-payment risk are both considered medium-low, while government debt to GDP is predicted to remain reasonably stable at 41.5% since its pre pandemic rise.

Korea, Dem. People’s Rep.  (PRK)

North Korea’s overall risk level remains very high. Kim Jong Un remains the supreme leader of the country. Political violence, political interference and legal & regulatory risk remain very high. North Korea continues to improve its military system with multiple new weapons and has pledged to continue doing so. North Korea, is still a major ally of Russia and is supplying troops as well as arms in exchange for oil and technology transfers. However, North Korea has been suffering from food shortages, due to the UN sanctions over its weapons and several natural disasters, which have also led the country to deepen its agricultural ties with Russia. High inflation has also been disruptive to the economy.  Meanwhile, the Trump administration has too many issues to focus on North Korea directly for now, but Trump still claims to have a good relationship with Kim Jong Un. In the coming years this could lead to new negotiations to freeze North Korea’s nuclear program at current levels. North Korea might also be willing to consider such an idea in exchange for recognition as a nuclear power, provided they receive U.S. financial support, though China, Russia and South Korea would be uncomfortable with this. Complete denuclearization is unlikely to be agreed. Meanwhile, supply chain disruption remains high. Sovereign non-payment remains medium high and exchange transfer remains low. The risk of doing business remains very high in North Korea.

Macau (MAC)

Macau is an autonomous region in the south of China, known as the ‘Las Vegas of Asia’, that has retained its overall country risk rating of medium-low. The Chief Executive of the Special Administrative Region of Macau, Sam Hou Fai, is head of the local government, while Head of State remains President of the People’s Republic of China, Xi Jingping. Political interference and political violence are both considered to be low, while legal & regulatory risk is re-affirmed at medium-low. Macau is economically driven by its thriving tourism industry; its visitor arrival rate had experienced a 13.7% year-on-year growth rate in Q1 of 2026 alongside the support of its casino-resorts. Despite a solid first quarter, the IMF expect GDP growth to slow to 3% in 2026, compared with more expansive growth levels recorded in 2025 and 2024. Macau’s casino operators are expected to receive softer Q2 results, as last-year’s high base will continue to distort the performance of gross gaming revenue (GGR). Additionally, while visitor numbers have shown strength in early 2026, the majority of Macau’s tourists come from Mainland China, where ongoing economic headwinds have made visitors far more conservative with their spending. Macau, however, is aiming to reduce its reliance on its casino industry with a five-year plan that includes measures such as the development of a featured financial sector and boosting capital investment, as well as institutional policy support. The overall aim is to increase the contribution of non-gambling sectors to 60% of GDP by 2030, up from 56.7% in 2024. Inflation is expected to edge up to 1.8% in 2026 and 1.9% in 2027, while unemployment is forecast to remain a low 1.7% in 2026. The risk of doing business and the government’s inability to provide stimulus had been re-affirmed at a low rating. Meanwhile, sovereign non-payment risk is assessed as medium. Macau maintains its zero outstanding government debt, but tight political and economic ties with China remain. Finally, exchange transfer is seen to have a medium-low risk as the Macanese Pataca (MOP) is pegged to the Hong Kong Dollar (HKD) meaning there is an indirect peg to the USD through the HKD. 

Malaysia (MYS)

Overall risk for Malaysia remains medium-low despite a political landscape that has been defined by growing tensions within the ruling alliance. Prime Minister Anwar Ibrahim’s government consists of his Pakatan Harapan bloc, the Barisan Nasional alliance and several other regional parties, since the May 2023 election resulted in a divided political landscape. General elections are scheduled for February 2028, however, PM Anwar Ibrahim’s recent meeting with Malaysia's King, Sultan Ibrahim, has intensified pressure on him to call an early election amid internal divisions within the government. PM Anwar Ibrahim is considering a potential snap election if divisions continue to widen. Political interference and legal & regulatory risk have both maintained a medium-low rating, while political violence remains medium, as protests occur frequently in Kuala Lumpur but are usually well-organized and peaceful. In terms of international relations, Malaysia is determined to balance its ties with the U.S., China and Japan. Meanwhile, energy disruptions caused by the Iran war have prompted countries such as Thailand to actively seek additional LNG supplies from neighboring Malaysia. The IMF’s April forecast indicates that Malaysia’s economy is expected to remain resilient, growing at 4.7% in 2026 and 4.3% in 2027. Strong domestic demand and robust electronic exports have driven the economy, while the mining sector had seen a 1.1% decline in Q1 of 2026 mostly due to a fall in production in crude oil and natural gas. Inflationary pressures have so far been contained, as of April 2026, following the IMF’S 1.9% forecast for 2026 and 2% forecast for 2027. Therefore, the risk of doing business remains medium-low. Government debt to GDP is expected to fall marginally to approximately 69% over the next two years. Malaysia’s elevated public debt has been stabilized following the government’s cut of the country’s fiscal deficit. Both Sovereign non-payment risk and exchange transfer risk have maintained a medium rating.

Mongolia (MNG)

Mongolia, has maintained its overall country risk rating of medium. A dual-leadership system is in place featuring President Ukhnaagiin Khürelsükh, who has led office since 2021, and newly selected Prime Minister Nyam-Osoryn Uchral. In a period of political stalemate and infighting within the ruling Mongolian People’s Party (MPP), Nyam-Osoryn Uchral is now the nation’s third prime minister in only nine months, following the resignation of previous PM, Zandanshatar Gombojav, due to a disagreement with the MPP. The two prior PMs had been ousted by no-confidence votes in both June 2025 and October 2025. Political violence remains medium-low, while political interference is re-affirmed at its medium rating, in the light of the newly selected PM’s promise to prioritize action over process and to stabilize the prices of imports. On an international level, the neighboring Russia and China are heavily relied on economically, and more recently, Mongolia stepped up its security ties in its first Border Defense Cooperation in 2025. However, Mongolia’s refusal to join the Shanghai Cooperation Organization (SCO) shows its primary aim of protecting its independent, democratic foreign policy and enabling the nation to be able to build partnerships with Western powers. Positive relations with India are also developing, supported by USD 1.7 bln in Indian financing for Mongolia’s first oil refinery, which is expected to begin operations in 2028 and reduce the country’s dependence on Russian hydrocarbons. Legal & regulatory risk kept its medium-high rating. According to the IMF’s April 2026 economic outlook, GDP growth is expected to remain resilient with forecasts indicating a stable rate of 5.3% in 2026 and 2027. The continued growth of copper and gold exports, particularly from its key Oyu Tologoi mine, has helped offset weaker coal activity. Strong export earnings alongside resilient household incomes have meant consumer spending has remained high. In the light of this and the prolonged war in the Middle East, high energy and food prices underpin the IMF’s 7.4% 2026 and 7.2% 2027 inflation forecasts and provide reasoning for the Bank of Mongolia’s hawkish 12% policy rate. In a bid to stabilize its prices and national currency, amid rising government spending, the central bank maintained its monetary stance. Therefore, the risk of doing business remains medium-high, while the government’s inability to provide stimulus is re-affirmed at medium. Lastly, Mongolia’s government debt to GDP is projected to be 43.7% in 2026 and 45.8% in 2027, while the government’s proactive debt management and fiscal consolidation have supported the mitigation of external financing risks. Currently, sovereign non-payment risk is assessed at medium-low, with exchange transfer remaining unchanged at medium.

Papua New Guinea (PNG)

Papua New Guinea, retained its overall country risk rating of medium-high. Prime Minister James Marape has served in his role since May 2019, representing the Pangu Party. He was re-elected in the 2022 elections and is expected to remain in office until the 2027 elections. PM Marape’s efforts to reduce the country’s public debt and prevent any further violence with the Bougainville secessionists (independence from PNG is targeted for September 2027), has not gone unnoticed. Political violence and political interference both remain medium-high, as clashes between gangs and tribes continue despite the presence of the current police and army. Legal & regulatory risk, however, is assessed at a rating of high. Papua New Guinea has maintained close and positive relations with its commonwealth counterparts, South Africa, Canada and especially Australia. Australia, in particular, offer world-leading mining expertise and an alliance which was solidified by the two countries’ defense deal in late 2025. The deal ensures that China will not be able to gain access to a large proportion of PNG’s infrastructure, while also allowing 10,000 PNG citizens to join the Australian military. In addition, Indonesia’s and Australia’s security plan is expected to expand to include PNG with trilateral security agreements to be developed. 

In terms of Papua New Guinea’s economy, the IMF projects GDP growth at 3.8% throughout 2026 and 2027, despite ongoing geopolitical tensions. In the Pacific, PNG continue to take advantage of the abundant natural resources available to them, including gold, gas and products that benefits its agricultural sector. In addition, the country’s high exposure to natural disasters is becoming increasingly evident, as two magnitude 6 earthquakes had struck towards the end of 2025. Supply chain disruption remains at a medium-high risk, while the risk of doing business continues to be assessed as high. Inflation is expected to stay at 5% in 2026 following no change in policy rate since the 100-bps hike to 5% in September 2025. Lastly, government debt to GDP is forecast to continue its path of reduction hitting 49.2% in 2026 and 46.4%, while PNG is combating a protracted balance of payments problem. In the light of this, the IMF have reached a loan agreement with the PNG to access approximately USD 216 mln. Sovereign non-payment risk and exchange transfer are considered to have a medium-high rating.

Sri Lanka (LKA)

Sri Lanka, has maintained its medium-high overall country risk rating. Aruna Kumara Dissanayake is President, alongside his left-wing National People’s Power (NPP) coalition, following its landslide victory in the 2024 election. However, the government’s handling of the recent Cyclone Ditwah and high poverty levels has left a sour taste among voters. Alongside this, rising oil and gas prices continue to worsen as locals face surging costs and fuel rationing. Political interference and legal & regulatory risk remain medium-high. In the light of the deepening Middle Eastern conflict, President Dissanayake made the decision to raise power tariffs 7.2% for households and 8.7% for industries, as the country imports its entire fuel supply. Sri Lanka is currently in talks with India, Russia and the U.S to enable the Island to gain an uninterrupted supply of fuel. The South Asian country continues to rely on international aid from partners such as the EU, while balancing its strategic ties with both India and China. Sri Lanka is pursuing a neutral stance in the U.S. – Israel war against Iran, despite its rescue operation that recovered 32 Iranian crew members from the warship IRIS Dena after it was struck by a torpedo from a U.S. submarine.

Economically, Sri Lanka had set its sights on achieving a 4-5% GDP growth rate following its rebound from the recent Cyclone Ditwah. However, the World Bank after the Iran War now expect GDP at 3.6% in 2026. Inflationary pressures have accelerated somewhat following April’s headline inflation of 5.4% compared to March’s 2.2%, reflecting the spillovers from the conflict in the Middle East. In the light of this, Sri Lanka’s central bank had maintained its policy rate of 7.75% in its March 2026 meeting, citing a restrained approach in terms of the ongoing geopolitical uncertainty. Therefore, the risk of doing business remains medium-high, as the latest IMF staff-level agreement for USD 700 mln aims to maintain the economy’s path toward recovery and inclusive growth. Government debt to GDP has continued to constrain the country’s sovereign credit ratings. Despite the successful completion of restructuring its previously volatile debt levels, Sri Lanka still holds an unchanged medium-high rating for both sovereign non-payment risk and exchange transfer.

Taiwan (TWN)                                   

Taiwan’s overall country risk score of medium-low reflects its economic strength and only ongoing, rather than escalating tensions with China over reunification. The economic front is constructive with the AI boom causing a surge in semiconductor chip production and exports, which likely means that growth will exceed the IMF forecast of 5.2% for 2026. Orders are solid for the next 6-18 months, as AI application revenue surges and fuels the multi-year demand for more AI computing capacity.  Taiwan’s trade picture has also been helped by the agreement with the U.S. to reduces tariffs to 15% that has calmed tensions with the Trump administration.  However, geopolitical uncertainty remains after President Trump’s May visit to China.  Though Trump claimed that the Taiwan policy had not changed, he noted that he was against Taiwan independence and indicated that December’s USD11bln of military purchases could be delayed.  The risk of invasion or blockade by China remains low in 2026 and 2027, given the high risks involved.  However, China will continue to increase pressure on Taiwan to reunify via military exercise and pressure on other countries to isolate Taiwan.  This will be supplemented by encouraging reunification voices in Taiwan after the visit of the Kuomintang leader to meet President Xi in April. 

Thailand (THA)

Thailand’s overall country risk rating has been maintained at medium-high. Prime Minister Anutin Charnvirakul had seen success in a parliamentary vote in March 2026 that had confirmed his re-election, with the backing of 293 of parliament’s 499 total members. The first re-elected prime minister in two decades has potential to bring a period of stability in a turbulent Southeast Asian nation. Political violence maintains its high-risk rating, despite an unexpected meeting between Thailand’s and Cambodia’s leaders on, ‘trust-building measures’. U.S. President Trump’s first attempt to restore peace had fallen through, while the second required 20 days of violent altercations along the shared border in late 2025 before both sides agreed to a bilateral truce. Although measures are being taken to strengthen such a fragile ceasefire, troops continue to be deployed along both sides of the shared border. In terms of the development of foreign policy, advancements have been made regarding agreements in the supply of energy due to Thailand being significantly hit by the Middle Eastern conflict. Long-term agreements between the U.S and Thailand on LNG supply are currently under negotiation, following the critical damage to Qatari natural gas production. Malaysia is another LNG supplier Thailand has also turned to. In addition to diversifying its supply of LNG, Thailand has made movements towards the possibility of purchasing Russian crude oil, while currently gaining a majority of its supply from Angola and the United States. Political interference has been assessed at a medium rating, alongside a legal & regulatory risk rating that is interpreted to remain medium-high. In the IMF’s April 2026 outlook, Thailand’s GDP growth rate is forecast at 1.5% for 2026. This is supported by higher exports and rising investment – one example being the local unit of TikTok’s injection of a huge USD 25 bln for the expansion of digital infrastructure. In efforts to cushion the impact from the global energy crisis, the Thailand cabinet had approved an emergency decree authorizing a USD 12.2 bln borrowing plan to ease living costs, supporting growth. The IMF forecast inflation at 0.9% for 2026. The IMF project government debt to GDP to continue its upward trend, reaching a projected 66.8% in 2026 and 67.8% in 2027. Sovereign non-payment risk and exchange transfer both remain medium. Therefore, the risk of doing business has maintained its medium-low rating.

Please refer to the following link (here) to access our full Country Insight Scores.