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Climate change may impact sovereign ratings, says Moody's

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Staff Writer | November 10, 2016
India drought
Nature   At risk from climate change

Countries' creditworthiness could be increasingly affected by climate change, with African and South Asian sovereigns most susceptible to the economic effects of global warming, Moody's said.

By contrast, Western Europe, North America and Australia as well as the huge landmasses of Russia and China were least vulnerable, Moody's found.

Climate change has ramifications for countries' credit profiles through potential economic impact, damage to infrastructure, rising social costs, and population shifts, Moody's said.

For example, gradual desertification in Israel, Lebanon and Jordan caused by global warming is leading to land degradation and infertility.

Authorities in Lebanon, rated B2 negative by Moody's, predict the economic damage from climate change could reach more than $80 billion by 2040, or 1 1/2 times its current GDP.

Mozambique, which suffered heavy floods last year and is already on the brink of default at a rating of Caa3, was calculated to be the most susceptible of any country Moody's rates.

Jamaica and Belize, small countries with high debt and Caa2 ratings, are seen as the next two most vulnerable, while India is also seen as highly at risk from climate change, with 48 percent of its workforce in the agricultural sector.

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