Fitch, the global ratings agency, on Tuesday said the dual impact of the coronavirus and oil price tumble will put pressure on some sovereign credit fundamentals and potentially ratings. The economic effects of an oil shock may be longer lasting than the coronavirus, it said.

A Fitch note said the key drivers on ratings in developed markets would be the effect on growth, and the fiscal and monetary responses.

On the other hand, emerging markets face additional risks related to commodity export receipts, capital flows and exchange-rate pressures.

The rating agency pointed out that investor sentiment can ultimately affect capital flows and EM sovereigns whose currencies have weakened the most

Oil prices crashed after Saudi Arabia said on Sunday it would increase production and cut prices after talks with Russia collapsed.

``Low oil prices weighed on ratings of major exporters in 2014-2016 and will do so again if the oil price war leads to sustained lower prices. The collapse in commodity prices in 2014 led to numerous EM sovereign downgrades and many oil-exporting sovereigns are still struggling to adjust to that shock, with break-even oil prices well above current market rates’’, it observed.

According to the agency, a number of sovereigns have already announced fiscal actions, or pending actions. These include China, Japan, Korea, Singapore and Malaysia in Asia where COVID-19 spread initially, and Italy, which has been most affected in Europe.

It may be recalled that in a statement, the G7 had talked about taking 'fiscal measures where appropriate', following a call among finance ministers and central bank governors on the virus and its economic implications.