The credit conditions of Central and Eastern European public debtors are expected to deteriorate next year, primarily due to the spillover economic effects of the war in Ukraine, especially on the energy market, and the likely sharp slowdown in growth, so the overall rating outlook for the region as a whole is negative, according to the regional sector analysis presented by Fitch Ratings on Thursday in London. At the same time, the international credit rating agency maintains a stable sovereign debt rating outlook for Hungary.
Fitch emphasizes in the study that it currently maintains a sovereign rating for six Central and Eastern European emerging economies with a negative outlook indicating the possibility of a downgrade, while the number of regional sovereign debtors with a positive outlook is two.
Two other economies of the country group - Ukraine and Belarus - are listed on Fitch Ratings' list with such a low rating that the company does not record a separate rating outlook for them. The credit rating agency registers Ukraine with "CC" and Belarus with "RD" (Restricted Default), indicating limited state bankruptcy.
Among the regional economies, the negative outlook applies to the Czech Republic, Estonia, Macedonia, Romania, Slovakia and Turkey.
On January 28 and July 22, Fitch Ratings confirmed Hungary's foreign currency-denominated long-term public debt obligations at the level of "BBB" with an investment recommendation, both on January 28 and July 22.
At the same time, in its study on Thursday, the company highlighted that the distribution of outlooks for sovereign debt ratings in emerging European economies is now worse than a year ago, as at the end of 2021 there were four negative and three positive outlooks in the region.
The negative growth effects resulting from the war in Ukraine are mainly manifested through high energy prices fueling inflation and the resulting tight monetary policy, as these factors restrain private sector spending and investment, Fitch's assessment states. According to the credit rating agency, the pressure resulting from these factors also affects the growth of the key trade partner economies of the Central and Eastern European emerging markets: Fitch's forecast suggests that the value of the gross domestic product (GDP) of the euro zone will decrease by an average of 0.1 percent in 2023 as a whole.
In this environment, the company calculates that the median growth rate of the 13 emerging economies in Central and Eastern Europe, which it classifies as sovereign, will be only 1.1 percent next year. exercise next year on the growth performance of the emerging European region and the euro area.
Moody's Investors Service, the international credit rating agency, announced in its annual forecast that it expects GDP growth of 3 percent this year and slowing to 1.7 percent next year in real terms in the world economy as a whole. Moody's highlighted that its previous forecast, issued in February before the start of the war in Ukraine, predicted an average expansion of regional gross domestic product of 4.5 percent by 2023 in Central and Eastern Europe, but in its new forecast it reduced this to 1.3 percent.
In Western Europe, the credit rating agency expects an average full-year GDP decline of 0.4 percent in 2023, instead of the 1.9 percent increase in its previous forecast.
Source: Magyar Hírlap
Image: AFP
