Fitch Ratings has revised its 2026 sector outlook for the Chinese mainland, Hong Kong, Macao and Taiwan to "neutral" from "deteriorating" based on sustained GDP growth resilience and improving price dynamics.

The ratings agency, however, has changed its 2026 global sovereign sector outlook to "deteriorating" from "neutral", warning that the US-Iran conflict is likely to weigh on global growth, fuel inflationary pressures, push up bond yields and heighten sovereigns' geopolitical risks.

In a report released on Monday, Fitch said robust exports remain a key growth driver as the Chinese mainland, Hong Kong, Macao and Taiwan have weathered tariff uncertainty and benefitted from the artificial intelligence investment boom. The region appears relatively insulated from the energy shock though is not immune from its impacts on global growth.

Jeremy Zook, senior director of APAC Sovereigns at Fitch Ratings, said robust external demand is supporting economic resilience across the Chinese mainland, Hong Kong, Macao and Taiwan and risks from the energy prices shock are cushioned by strong external finance positions.

Price dynamics in the Chinese mainland are improving as the mainland exits a period of deflation, although Fitch expects inflation to remain low, Zook said.

Fitch has raised its GDP growth forecast for the Chinese mainland to 4.6 percent in 2026 from 4.1 percent at the outset of this year, largely because of supportive exports.

A recent China-US summit with an emphasis on strategic stability should limit risks of a sharp near-term escalation in trade tensions. In addition, AI-related exports are continuing to power GDP growth in 2026 in China's Hong Kong Special Administrative Region (3.5 percent) and China's Taiwan region (6.9 percent).

The energy price shock and potential supply disruptions are important external risks, but relatively large crude oil inventories, substantial domestic refining capacity and diversified energy sources from coal and alternative supplies should cushion risks across the Chinese mainland, Hong Kong and Macao, the report said.