Islamabad, 8 May, 2025: S&P Global has flagged growing regional financial risks amid the recent military tension between India and Pakistan, though it does not foresee any immediate changes to either country’s sovereign credit standing.
In a newly issued report, the international credit rating agency labelled the current standoff as a short-term flare-up rather than a prolonged crisis.
It expects sporadic confrontations to continue briefly before calming measures take effect.
Reflecting this assessment, S&P Global confirmed India’s long-term credit rating at BBB- with a positive outlook, while Pakistan’s remains at CCC+ with a stable forecast.
READ MORE: Fitch Upgrades Pakistan Credit Rating to B- Outlook Stable
Despite this steady rating, the agency issued a word of caution. It suggested that any accidental clashes or misjudgments could potentially spark a broader and more damaging conflict, placing both economies at heightened risk.
Analysts at the agency forecast a tense atmosphere to persist for up to three weeks, warning that the possibility of intensified military operations cannot be ruled out.
However, they predicted a return to relative calm shortly thereafter, minimising the chances of long-term harm to the nations’ financial profiles.
The report also outlined key domestic strengths for both countries. India’s economic expansion and progress in fiscal reform were seen as key buffers against external shocks.
Pakistan, meanwhile, was recognised for efforts in reviving its economy and maintaining fiscal discipline.
S&P Global noted that both Islamabad and New Delhi have strong strategic and financial incentives to avoid a prolonged conflict.
READ MORE: Pakistan Rating Expected to Improve as Moody’s, S&P, and Others Signal Positive Outlook: Report
For Pakistan, an extended standoff might derail progress on balancing its external finances and budget control.
For India, an enduring escalation could reduce investor trust and slow the inflow of foreign capital at a time when global investment conditions are already fragile.
The agency concluded with a warning that if tensions fail to subside, mounting uncertainty could lead to growing pressure on both nations’ credit ratings, particularly due to the dangers of unintended military engagements.
