The Tale of the Tariffs
Within emerging-market economies, ongoing uncertainty over U.S. tariff policy continues to reshape global trade flows. However, the impact varies significantly across regions and by export mix.
For the institutions included in our Safest Emerging Markets Banks, this environment presents both risks and opportunities. Trade volatility can weigh on corporate clients and credit demand, but it also increases the need for specialized trade and supply-chain financing, treasury, and foreign exchange services. Some emerging-market economies are benefiting as U.S. importers shift sourcing away from more heavily-tariffed countries. According to IMF research, trade diversion and import reallocation toward lower-cost alternatives can help mitigate tariff exposure by changing suppliers, relocating production, and rerouting trade. While these measures can help preserve trade activity, they can also introduce higher costs, operational inefficiencies, and greater supply-chain complexity.
Additionally, tariff impacts vary by region and product. In the Asia-Pacific region, U.S. tariffs are estimated at 21% on China and between 2% and 11% on other Asia-Pacific economies.
South Korea and Taiwan remain highly exposed because they depend heavily on technology exports. However, exceptionally strong demand for semiconductors and AI-related components has so far more than offset much of the tariff-related drag on exports. In South Korea, overall exports rose 84% year over year to a record $121 billion as of September, while semiconductor exports surged 263% to $60.3 billion, according to government data.
Over the same period, Taiwan also reported significant export growth, rising 61% to a record $87 billion, driven by global demand for advanced AI chips and technology products. For the South Korean and Taiwanese banks included in our ranking, this export strength supports corporate activity across the technology, manufacturing, and capital investment sectors, even as tariff-related uncertainty persists. More broadly, emergingmarket economies are contending with heightened inflation pressures from the energy shock associated with the ongoing war with Iran, which contributes to volatility and uncertainty for both consumer and commercial banking clients.
Among the winners for Safest Emerging Markets Banks, changes in sovereign ratings and bank regulatory developments in certain jurisdictions drove shifts in our rankings. In November 2025, S&P upgraded Kuwait to AA- from A+, reflecting the government’s progress with implementing fiscal and economic reforms under Kuwait Vision 2035, the country’s national development strategy. The agency also upgraded National Bank of Kuwait to A+ from A, reflecting its strong franchise in its home country with a 30% market share and its success in geographic diversification, as approximately 25% of revenue is from international sources. Consequently, the bank rose five places to No. 13.
In Saudi Arabia, Fitch raised the ratings of Saudi National Bank and Al Rajhi Bank to A from A- in December 2025. For both banks, Fitch emphasized their strong business profiles and credit metrics, while also increasing their government support ratings component. This move boosted Saudi National Bank up seven places to No. 18, and Al Rajhi moved up six spots to No. 20.
In May, Fitch upgraded Komercni Banka of the Czech Republic to A+ from A. The agency revised its global bank rating methodology to give greater ratings credit to loss-absorbing debt buffers in jurisdictions with developed bank-resolution regimes. As a majority-owned subsidiary of Société Générale, Komercni Banka benefits from the group’s large resolution debt buffer. The bank’s ranking climbed four places to No. 23. In Qatar, AlRayan Bank benefited from Fitch initiating coverage with an A rating. The bank is now eligible for inclusion in our Safest Emerging Markets Banks at No. 38.
