Pakistan, May 8 -- The ongoing military escalation between Pakistan and India is drawing increasing concern from international financial watchdogs, with warnings that the crisis could destabilize not only the region but also broader economic dynamics. Credit ratings S&P Global and the International Monetary Fund (IMF) both issued statements urging immediate diplomatic de-escalation to prevent lasting damage to the sovereign credit profiles and economic outlooks of both nations.

On Thursday, S&P Global Ratings flagged the growing geopolitical instability as a serious risk factor for regional credit markets. While the currently assesses that the military actions remain contained, it emphasized that any miscalculation or prolonged hostiliti...