According to top rating agencies, South China Sea’s ruling has resulted to heightened geopolitical risks which could have influence on sovereign ratings of economies in the area. The Standard & Poor has stated that the International Tribunal’s decision over the disputed islands between China and the Philippines may increase regional tension and generate disadvantageous risks.
Kim Eng Tan, S&P’s senior director of Asia-Pacific sovereign ratings claimed that it has decreased the government’s flexibility towards future incidents and that small occurrences could result in powerful government actions which would put additional pressure to the interconnected economic relations of Asia. Given the current situation, economic implications may be brought up affecting bilateral trade and investment between Asian economies.
Major rating agencies have declared that the heightened tensions could provoke negative credit scores for China and the Philippines.
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