Asia Country Risk Ratings

Asia

Afghanistan (AFG)

Afghanistan remains rated very high risk overall, with political isolation, severe social restrictions and regional security tensions continuing to constrain recovery. Political violence, legal & regulatory risk, supply-chain disruption, political interference and the risk of doing business are all rated very high. Five years after returning to power, the Taliban continue to exercise near-total political authority without broad international recognition. Restrictions on women and girls remain among the most severe in the world; UNESCO estimated in August that around 2.4 million girls had been excluded from secondary education since 2021. These policies reduce labour-force participation and human capital and continue to limit Afghanistan’s access to development finance. Security has improved in some areas compared with the pre-2021 conflict, but Islamic State-Khorasan remains active and relations with Pakistan are strained by Islamabad’s accusations that Afghan territory is used by the Tehreek-e-Taliban Pakistan. Border closures and regional tension periodically disrupt trade.

The World Bank estimates real GDP growth of about 4% in 2026, supported by domestic demand and the return of millions of Afghans. Population growth has, however, outpaced the recovery, leaving GDP per capita lower and living standards weak. Inflation rose to 7.6% by March 2026 because of food prices, supply constraints and strong demand. Declining external grants, weak investment and a widening trade deficit limit the government’s ability to respond to shocks. Sovereign non-payment and exchange transfer risk are both medium-high. Afghanistan has little conventional access to international capital markets, while sanctions, correspondent-banking restrictions and limited FX reserves complicate cross-border payments. The government’s inability to provide stimulus has moved up from medium to medium-high and banking-sector vulnerability remains medium-low, but these ratings reflect a shallow, heavily constrained financial system rather than conventional strength. The economy has shown more resilience than many expected, yet widespread poverty, food insecurity, restrictions on women, weak institutions and regional security tension mean the country remains an exceptionally difficult environment for businesses, investors and humanitarian organisations.

Bangladesh (BGD)

Bangladesh’s overall country risk rating remains at medium-high, with the risk of political violence at high. Though the February 2026 election delivered the Bangladesh Nationalist Party (BNP) a two-thirds parliamentary supermajority, reports of politically motivated killings still remain. The risk remains of further post-election violence, factional clashes and attacks on minority communities underscoring a volatile transition environment. Thus supply chain disruption is also rated at medium-high. Meanwhile, President Mohammed Shahabuddin resigned in July due to ill health and will be replaced within 90 days. Elsewhere, Myanmar has indicated that 300k Rohingya refugees could return from Bangladesh once political stability improves, which could reduce tension between the two countries. On the economic front, the IMF projects reasonable 4.7% GDP growth in 2026, while inflation is forecast to be 9.2% in 2026 but come down to 6.0% in 2027. However, the current account deficit in 2026 is expected to remain small, while the government debt/GDP ratio is forecast at a manageable 41.8% of GDP in 2026.

Cambodia (KHM)

Cambodia remains medium-high overall, with weak governance and a difficult business environment outweighing its manufacturing and tourism strengths. Legal & regulatory risk is very high, political interference is high and the risk of doing business is very high. Political violence and supply-chain disruption are both medium-high. Prime Minister Hun Manet continues to govern within the highly centralised Cambodian People’s Party system established under his father, Hun Sen. Opposition parties and independent media face severe restrictions, while judicial independence and transparency remain weak. Relations with Thailand remain an important security issue after the deadly border clashes of 2025. Although, direct diplomacy has resumed in some areas, land crossings have remained restricted and disagreements over border demarcation continue, leaving a material risk of renewed disruption to trade and tourism.

The IMF expects economic growth of around 3% in 2026, a substantial slowdown from Cambodia’s pre-pandemic norm. Inflation is projected at about 5.6%, reflecting higher imported energy and food costs. Tourism and garment exports remain important, but domestic demand is soft, the property sector is weak and reputational damage from large-scale online scam compounds based in Cambodia has affected foreign investment and financial relationships. Banking-sector vulnerability is rated medium. Rapid credit growth in earlier years left banks exposed to real estate and construction, and asset quality has deteriorated as property activity slowed. Sovereign non-payment risk is medium and exchange transfer risk is medium-low, supported by relatively modest public debt, extensive dollarisation and foreign-exchange reserves equivalent to several months of imports. The government’s inability to provide stimulus is medium-low, giving Phnom Penh some fiscal capacity, although social spending needs and weaker revenues are increasing. Cambodia’s manufacturing base and location within Asian supply chains remain important strengths, but concentration in garments, tourism and construction makes the economy vulnerable to external shocks. Further improvement would depend on calmer relations with Thailand, tighter financial supervision and progress on corruption, rule of law and the criminal networks that have damaged Cambodia’s business reputation.

China (CHN)

China’s overall country risk score remains at medium. The July 30 Politburo readout places emphasis on domestic demand to support the economy after the soft Q2 GDP reading. However, cyclical trade in programs to support households in March were less than 2025, while improvements in structural safety nets remain small – a large improvement would reduce precautionary savings and also boost consumption. The risk is that actual additional policy stimulus will be incremental on the fiscal front, while the PBOC remains reluctant to cut interest rates for fear of undermining profit margins and bank lending. Elsewhere, the exchange transfer risk remains at medium-high. A growing 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. In terms of political risk, China’s domestic situation remains stable, as the authorities maintain internal stability. Externally China is in a trade truce with the U.S., which will likely not change this year as it suits China. Finally, the risk of an invasion or blockade of Taiwan by China remains low in 2026 and 2027, given the high risks involved with the U.S. maintaining the strategic ambiguity policy.

Hong Kong (HKG)

Hong Kong remains a medium-low rating overall. Political violence, legal & regulatory risk and political interference are all rated medium-low, while supply-chain disruption and the risk of doing business are low. Large-scale unrest has not returned, but the continued application of national-security and sedition legislation has narrowed political space and increased compliance risk for media, education, civil-society and other politically sensitive activities. For mainstream commercial activity, Hong Kong still benefits from sophisticated courts, efficient administration, low taxation and world-class logistics. However, closer integration with mainland China means that changes in Beijing’s regulation of data, capital flows and overseas investment increasingly affect Hong Kong-based firms.

Economic growth has strengthened significantly. Real GDP expanded by 5.9% year-on-year in Q1 2026, supported by technology-related exports, tourism, private consumption and financial services. On August 14th, the Hong Kong government raised its growth forecast to 3.5% - 4.5% after Q2 GDP grew 4.3% Y/Y, while the IMF projects growth of around 2.4%. Inflation remains contained compared with many other economies, although the government raised its 2026 headline forecast to 2.6%. The banking sector is the main weakness, which is rated medium-high. Banks remain well capitalised, but exposure to mainland China’s property downturn, weak local commercial real estate and shifts in cross-border wealth management create pressure. In August, Beijing intensified scrutiny of some channels used by mainland investors to move money into offshore financial products, adding uncertainty for Hong Kong’s insurers, private banks and asset managers. Sovereign non-payment risk is rated medium, while exchange transfer risk and the government’s inability to provide stimulus are medium-low. Hong Kong retains substantial fiscal reserves, a credible currency-board arrangement linking the Hong Kong dollar to the U.S. dollar and unrestricted capital convertibility. These buffers keep external-payment risk low in practice, although the economy’s narrow tax base and growing exposure to mainland financial conditions remain important. Hong Kong’s commercial infrastructure and balance sheet remain major strengths. Financial-sector exposure to mainland China and tighter political controls, however, continue to distinguish its risk profile from other low-risk financial centres.

India (IND)

India’s overall rating remains at medium. In terms of domestic politics, the picture is fluid. The BJP has done well in state elections including a victory in West Bengal in April. However, some tension exists among Gen Z voters over unemployment, which has generated a fake protest party – the Cockroach Janta party. This protest has been so strong that it forced the education minister to resign. Additionally, voter concerns over restrictions to discourage fuel usage have also been seen. Meanwhile, Pakistan’s attempt to hold assembly elections in Gilgit-Baltistan (territory New Delhi considers illegally occupied) has drawn severe criticism from India. Separately, India's suspension of the Indus Waters Treaty following the Pahalgam attack last year has added a significant water-sharing dimension to an already strained bilateral relationship, raising the prospect of a conflict. With the Uttar Pradesh elections in November, a moderately high risk exists of war. However, any military escalation, should it materialise, is expected to be short in duration, a matter of days rather than a prolonged conflict.

On the economic front, the Iran war is a headwind to growth but also boosting inflation. The IMF projects a slowdown in GDP growth to 6.5% in 2026, with an inflation rise to 4.7%. Additionally, the super El Nino in the Pacific could weaken the monsoon and hurt rural income/consumption while also boosting food prices. However, a dovish Reserve Bank of India (RBI) is reluctant to hike policy rates, if the inflation pick up is temporary and given the slowdown in the economy. Though the Indian Rupee (INR) is weak this is not excessive and RBI is using FX intervention to slow the weakening trend against the USD. 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 given high nominal GDP growth. This keeps the inability to provide fiscal stimulus at medium. The banking sector is also in a reasonable situation, and this keeps the banking sector vulnerability risk at medium-low.

Indonesia (IDN)

Overall risk for Indonesia remains assessed as medium. The current President of Indonesia, Prabowo Subianto, has seen declining popularity, as economic growth is failing to flow down to all sections of society and causing discontent over cost of living pressures. Additionally, pressure from the president to the media, plus a corruption case on the free meals program, have raised tensions around the government and caused domestic discontent. Political violence thus still has a risk rating of medium high, with concerns remaining about a repeat of the 2025 deadly anti-government protests. 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. Political interference remains assessed as medium, while legal & regulatory risk is unchanged at medium-high rating. The risk of doing business also remains medium-high.

On the economic front, the IMF forecasts GDP growth at 5% in 2026 and 5.1% in 2027, though the August Flores earthquake could cause some adverse impact in Q3. Though the unemployment rate is a low 4.7%, informal jobs are producing insecurity and graduates are finding it more difficult to get jobs. This is causing concerns that economic growth is not benefitting all parts of society. The other big issue is Indonesian Rupiah weakness, both due to the Iran war energy shock but also concerns about government policy. This has been compounded by parliament adding jobs/growth to Bank Indonesia’s mandate and perceptions of political interference (President Prabowo nominated his nephew to be deputy governor). Even so, inflation is projected by the IMF to slow to 2.6% in 2027 after 3.0% in 2026. Government debt to GDP is predicted to remain reasonably stable at 41.5% in 2026, though some concerns remain that the budget deficit could push to the 3% legal limit given adverse effects from the Iran war and also intermittent government programs. For now the government’s inability to provide stimulus is assessed as medium-low.

Myanmar (MMR)

Myanmar remains rated high overall, as armed conflict and institutional breakdown continue to dominate the risk environment. Legal & regulatory risk and supply-chain disruption are both very high, while political violence, political interference and the risk of doing business are high. The military-backed political order remains deeply contested following the 2021 coup and the heavily criticised 2026 election. Armed resistance groups and ethnic organisations continue to control or contest large areas, while the military relies heavily on air strikes, artillery and restrictions on humanitarian access. In August, the United Nations said human-rights conditions had reached a new low, with millions displaced and widespread reports of abuses by both the military and armed groups. The conflict has fragmented transport networks, disrupted border trade and made the regulatory environment highly unpredictable. Sanctions and reputational risk further restrict access to international finance and investment.

Economic conditions remain severe. The World Bank estimates that GDP contracted by around 2% in FY2025/26, while inflation reached approximately 24.6% year-on-year in April 2026. Weak electricity supply, high fuel costs, declining household demand and disruption to agriculture and manufacturing continue to weigh on activity. The Middle East energy shock has added to transport and import costs, while conflict has reduced the reliability of trade routes to China, Thailand and India. Sovereign non-payment and exchange transfer risk are both medium-high. Myanmar’s external debt stock is not exceptionally large, but sanctions, foreign-exchange controls, multiple exchange rates and restrictions on international banking create major practical barriers to payment. The government’s inability to provide stimulus is medium-high, reflecting weak revenue collection, conflict spending and limited access to external finance. Banking-sector vulnerability is rated medium-low in the PRM, but this should be interpreted alongside extensive capital controls and a shallow, distorted financial system rather than as evidence of broad financial strength. Myanmar’s natural resources and strategic location offer long-term potential, but conflict, sanctions, institutional breakdown and severe supply-chain disruption mean the country will remain one of Asia’s most difficult operating environments for the foreseeable future.

Pakistan (PAK)

Pakistan’s overall rating remains at high. Domestically, political tensions remain with former Prime Minister Imran Khan’s imprisonment and 17-year Toshakhana-II sentence have not eroded his popularity – though recent reports suggest his health is deteriorating. Pakistan Tehreek-e-Insaf (PTI) protests persist, occasionally paralyzing infrastructure and triggering violent clashes. Tensions in Balochistan also remain. This keeps the political violence rating at very high. The PML(N)-PPP coalition under Prime Minister Shehbaz Sharif governs with limited cohesion, constrained by IMF conditionality and internal distrust. The military’s expanded influence following 2025 India tensions also raises the probability of further political intervention. Though the government is considering splitting the four major regions into many more provinces this reflects weakness in the current system, rather than a leap forward. The only good news is on the external front, with Pakistan agreeing a mutual defence commitment with Saudi Arabia and Turkiye. Meanwhile, the risk of a war with India in the next 6-12 months is moderately high, due to severe tensions on a number of issues. Any military escalation, should it materialise, is expected to be short in duration, a matter of days rather than a prolonged conflict. On the economic front, the IMF projects GDP growth at 3.6% in 2026, but the energy shock from the Iran war is forecast to boost 2026 inflation to 7.2%. The slow fiscal consolidation is also providing rewards with the IMF projecting a fall to 70.1% of GDP in 2026. The key weakness remains the low level of FX reserves, which is causing an ongoing dependency on the IMF and also China and Saudi Arabia. To bring more resilience, Pakistan is trying to leverage its diplomatic help in the Iran war, with a request to the U.S. to have an Argentina-style stabilisation fund of USD10bln – however it is unclear whether the U.S. will agree.

Philippines (PHL)

The Philippines remains medium-high overall. Political violence is rated high, reflecting the persistent threat from communist and Islamist insurgencies, periodic localised violence and the possibility that repeated maritime confrontations with China in the South China Sea could escalate through miscalculation. Domestic politics also remain polarised between President Ferdinand Marcos Jr. and the Duterte camp, while the administration has faced sustained scrutiny over alleged irregularities in flood-control and infrastructure spending. Political interference remains medium, but legal & regulatory risk is medium-high as corruption concerns, uneven enforcement and delays in public procurement continue to complicate the operating environment. Supply-chain disruption is also medium-high because the archipelago remains highly exposed to typhoons, port and transport bottlenecks and imported-energy shocks. Economic conditions have weakened noticeably since the May assessment. GDP expanded by only 2.3% year-on-year in Q2 2026, the slowest pace since 2021, bringing first-half growth to 2.6%. Construction contracted sharply and investment fell, partly reflecting the disruption to public works following the infrastructure corruption scandal. The government now expects 2026 growth of 3.5%-4.5%, substantially below recent Philippine growth rates. Inflation averaged around 5% through July, with higher energy and transport costs related to the Middle East conflict eroding household purchasing power. The risk of doing business remains medium-high, while banking-sector vulnerability is medium-low, supported by generally sound capital and liquidity buffers. Sovereign non-payment risk, exchange transfer risk and the government’s inability to provide stimulus are all rated medium. Public debt remains manageable and remittance inflows continue to support the balance of payments, but weaker revenue growth and higher borrowing costs are constraining fiscal flexibility. President Marcos has proposed a PHP7.2 trn 2027 budget, around 6% larger than the current plan, in an effort to restore momentum and rebuild confidence in infrastructure spending. Remittances and the diversified services sector continue to offer some resilience, although political friction, weak investment and elevated energy costs are likely to keep the risk profile above regional peers.

Singapore (SIN)

Singapore’s overall risk is unchanged at low. The government remains stable with the People’s Action Party (PAP) having 87 of the 97 seats in parliament. PM Lawrence Wong in July reenergised the cabinet with some young politicians being brought into positions. Though the opposition Workers’ Party hold different views on a number of policy areas, the next election is not due until 2030. Political violence continues to be rated at low. On the international front, Singapore continues to seek to keep good relations with China and the U.S. and avoid being drawn into geopolitics.

Singapore’s GDP growth has been revised up by the government from 2.0-4.0% to 4.5-5.5% after a strong H1 2026. The AI infrastructure boom is providing a noticeable boost to the manufacturing sector and also wholesale trade. This has more than offset a modest adverse effect from higher energy prices on the Iran war. Momentum should continue into 2027 provided that the AI capex wave does not slow. The risk of doing business continues to be assessed as low. In terms of inflation, the IMF forecast a rate of 2.3% in 2026 with a slowdown to 1.9% in 2027, as energy prices have fallen back from the peak. Meanwhile, the healthy external position continues, with the current account surplus projected at 16.6% of GDP in 2026. Additionally, the Singapore dollar (SGD) is expected to continue its strong path into H2 2026. Sovereign non-payment risk and exchange transfer risk remain unchanged at medium-low.

Taiwan (TWN)  

Taiwan’s overall country risk score of medium-low reflects its economic strength and ongoing moderate tensions with China over reunification. The economic front is constructive with the AI boom still 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 reduce tariffs to 15% that has calmed tensions with the Trump administration. However, geopolitical uncertainty remains with ongoing grey warfare from China’s navy and air force. Additionally, since June China’s coastguard vessels have been radioing shipping for details of their destination port in Taiwan, which is a step towards China’s coastguard quarantining Taiwan or one of its islands. If further measures are taken by China’s coastguard, this could raise tension about Taiwan, though this should be viewed as an alternative to blockade or invasion. This will also be supplemented by encouraging reunification voices in Taiwan after the visit of the Kuomintang leader to meet President Xi in April and ahead of the crucial January 2028 Taiwan presidential and parliamentary elections. The Trump administration stance remains fluid with Trump sounding a cooler note in his May visit to China, but reports that a USD14bln arms package for Taiwan could come to the U.S. Senate in the coming months.

Thailand (THA)

Thailand’s overall country risk rating has been maintained at medium-high. Prime Minister Anutin Charnvirakul has 293 seats of parliament’s 499 total members, which provides some stability. Parliament also passed an amnesty law covering 2005-25, which helps cool the political temperature, while ex PM Thaksin Shinawatra has also been released from prison and has gone to Dubai. Nevertheless, opposition parties have made fraud allegations against the government over Senate seats. Political violence maintains its high-risk rating. Meanwhile, tensions remain between Thailand and Cambodia over border disputes, despite U.S. efforts to bring calm. Political interference has been assessed at a medium rating, alongside a legal & regulatory risk rating remaining medium-high.

Thailand’s GDP growth rate is forecast at 1.5% for 2026 by the IMF. This is supported by 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. Additionally, Thailand is looking to deepen trade with BRICS countries by getting full BRICS membership in 2026. Even so, high energy prices from the Iran war have had an adverse impact on growth, with a 0.2% fall in Q2 from Q1. The IMF forecast inflation at 0.9% for 2026 could be exceeded with still high energy prices. Meanwhile, 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 remains medium, though exchange transfer has fallen to medium-low.

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