This report does not constitute a rating action. It's only February and it's already clear geopolitical risk will shape sovereign trends in 2026. The persistence of heavy investment in AI will also move economies and trade. While the credit impact on Asia-Pacific is likely negative, policymakers can position their economies for gains. The significant international changes last year had caused little apparent economic damage in Asia-Pacific. Most economies in the region maintained full-year real GDP growth at steady rates. In large part, the resilience was because U.S. tariff rates did not stay as high as initially announced. There have also been important exemptions of some goods from additional U.S. tariffs. Moreover, strong investment in AI-related infrastructure raised IT exports from
