Rating agency Fitch classifies creditworthiness from Austria – Diepresse.com
According to the rating agency, the fiscal and macroeconomic view has further deteriorated. The classification of the creditworthiness in the event of long -term bonds drops from « AA+ » to « AA ».
Austria’s economic problems have Rating agency FITCH caused a reassessment of the Austrian credit rating. On Friday later, the company lowered the creditworthiness of « AA+ » to « AA ». The outlook remains stable.
The classification remains in the investment grade category. But instead of the previous very high creditworthiness and the very low risk of a default, the country now only has a high creditworthiness and a low risk of a default. This makes loans more expensive.
The downgrading reflects persistent fiscal and macroeconomic challenges and an increase in public debt, according to Fitch.
Austria’s fiscal and macroeconomic view has deteriorated since the last review. The budget deficit for 2024 is 4.7 percent of economic output (GDP) and is therefore significantly above the forecast 3.7 percent. Despite the new government’s consolidation program, according to Fitch, the public debt will continue to increase as a percentage of GDP in the medium term.
Consolidation program endangered
The government’s consolidation program aims to reverse some of the measures for fiscal relaxation introduced in recent years. However, the persistent economic weakness endangers the growth of income and could undermine these efforts.
At the end of 2024, public debt was 81.8 percent of GDP, significantly higher than the 76.6 percent forecast a year ago. Fitch predicts that the ratio of debt and GDP will continue to increase in the medium term and that 86 percent of GDP will only be stabilized between 2027 and 2029.
Austria’s economy shrank by 1.2 percent in 2024, which marks the second consecutive year with a contraction. The country’s economic output is now 3.3 percent below the level before the Ukraine War, which is the weakest in the EU might. (Red.)
