LONDON- Droughts, floods and other forms of water stress will have a bigger impact on sovereign credit ratings over the medium to long term because of climate change, ratings agency Fitch said on Thursday.

Fitch, which assesses the likelihood of countries defaulting, said countries in the Middle East and Mediterranean were particularly at risk of not having enough water, while for several in south Asia and Africa the greater risk was of flooding.

"A rising imbalance between steadily growing demand for water and deteriorating availability of reliable supply has already placed large swathes of the world population, mostly in emerging market countries, in a situation of water stress," Fitch said.

"This is likely to intensify in affected regions and expand to new areas, as economic and demographic growth continues to drive a rise in demand while climate change puts further pressure on supply, exacerbating the uneven global distribution of water resources."

Countries including Egypt, Israel, Jordan, Kuwait, Morocco, Saudi Arabia and Tunisia were all at risk of drought and water stress, based on the Fitch analysis, while floods were more likely in countries including Bangladesh, Sri Lanka, Thailand and Vietnam, Benin, Mozambique and Rwanda.

The degree to which each country will be impacted would depend on how effective they are at devising and implementing mitigating policies, it added.

Water stress has already contributed to ratings downgrades this year, given its potential impact on economic growth, external finances or inflation, for Morocco, Namibia, Thailand and Zambia, it added.

(Reporting by Simon Jessop; editing by Barbara Lewis) ((simon.jessop@thomsonreuters.com; +44 (0) 207 542 5052; Reuters Messaging: Reuters Messaging: simon.jessop.thomsonreuters.com@reuters.net))