Fitch left Netherlands’ rating unchanged

F

Credit rating agency Fitch does not challenge the credit rating of the Netherlands. The office maintains its AAA assessment of the creditworthiness of the Netherlands, the highest possible reporting rate. Prognosis holds Fitch steady.

Fitch points out that the Netherlands has a flexible, value-adding and open economy. Fitch also calls the Dutch economy effective.

Due to the coronacrisis, the debt position of the Netherlands will rise above the level that justifies AAA status, according to Fitch. However, the rating agency points out that the Netherlands has a strong record of sound budgetary management. The rating agency believes that the Netherlands will stabilise or even reduce its debt ratio in the medium term when the pandemic is at its peak.

According to Fitch, the corona pandemic is disrupting the Dutch economy and the fiscal position. For example, gross domestic product (GDP) shrank by 8.5% in the second quarter of this year, after a 1.5% contraction in the first quarter. However, Fitch puts Dutch performance against the euro area and concludes that the Netherlands is doing better than average in this area. In the euro area, the decline in GDP in the first and second quarters was 3.6% and 12.1% respectively.

For the whole year, Fitch expects a contraction of Dutch GDP of 5.1 percent. Next comes a year with 3.4% growth. By 2022, the economic upturn will be 2.3%. However, Fitch points to the many uncertainties, especially now that the coronavirus is resurfacing worldwide.

Furthermore, Fitch expects the budget deficit to reach 7.5% this year, against a surplus of 1.7% in 2019. According to a draft budget, next year there will be a deficit of 5.5%, according to the credit agency.

About the author

Nicholas de Kramer

Nicholas de Krammer, а self-taught economic analytic with heave mathematical background. Math behind the economics (and economics behind math) is the strong side of the author. Contact him at [email protected]

Add comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Recent Posts

Categories