Global credit conditions in 2026 will be shaped by political fragmentation, rapid technological innovation and the growing financial costs of extreme weather events, according to Moody’s Ratings.
The agency said the balance of risks is shifting away from cyclical forces toward longer-term structural change, creating wider dispersion in credit performance across sectors and countries.
Moody’s said that “the year ahead will be shaped less by the business cycle and more by structural change and changing political dynamics.”
Its latest Credit Conditions report highlights four forces that will drive credit outcomes: political polarisation, the evolution of non-bank and digital finance, the trajectory of artificial intelligence (AI) adoption and the economic fallout from climate-related disasters.
Political polarisation is disrupting policy norms and reshaping global governance, the report found. Rising voter dissatisfaction with mainstream parties and the uneven benefits of globalisation are driving inward-looking policies across major economies, making international relations “increasingly transactional and fragmented.”
Moody’s warned that this reorientation “risks damaging institutional structures, reducing predictability and increasing credit risks.”
In the financial sector, the agency said the growth of private credit and digital finance is “increasing access to capital but at a cost.” Private credit has expanded into a $1.5 trillion market and could reach $3 trillion by 2028, while the rise of stablecoins and tokenised assets is reshaping liquidity.
However, Moody’s cautioned that inconsistent regulation and weak governance remain major hurdles.
AI is another major driver. Moody’s said that “investment in advanced chips and data centres remains strong, fuelled by optimism about AI’s transformative potential,” but warned that the credit impact will depend on whether reliability and adoption continue to improve after 2025.
If progress slows, the benefits will remain concentrated in “highly digital, data-intensive sectors,” while faster breakthroughs could broaden gains but also intensify competition and cyber risks.
The agency also pointed to rising costs from extreme weather events, which it said are “shifting credit risk across the economy.” Economic losses from disasters reached $318 billion last year, with insured losses of $137 billion.
While insurers are raising premiums and limiting coverage, Moody’s said this could depress property values, erode tax revenues and increase reliance on government support.
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