17 Jan 2015
Fitch affirms Luxembourg's AAA amid robust economy throughout the financial crisis
FXStreet (San Francisco) - Fitch Ratings affirmed Luxembourg sovereign rating at AAA with a stable outlook as the country "is a small, very wealthy economy, with a high degree of trade openness relative to its peers."
According to a press release, the rating reflects that Luxembourg performed well throughout the global financial crisis with a 5-year average growth of 2.5%, "compared with 0.6% for the euro area and 1.6% for 'AAA' peers."
Fitch highlights that the "general government debt estimated to be 24.2% of GDP, and a government surplus of 0.2% of GDP in 2014, outperforming the 'AAA' median."
Key quotes:
Real GDP growth is estimated to be 2.8% in 2014, and then forecast to slow slightly to 2.3% in 2015, before accelerating to 2.7% in 2016.
Inflation has been weakening, with the annual average falling to 0.7% in 2014, but is forecast to increase to 1.5% in 2015, due to the VAT increase.
Public finances are a key rating strength, with general government debt estimated to be 24.2% of GDP, and a government surplus of 0.2% of GDP in 2014, outperforming the 'AAA' median.
Luxembourg's external position is strong, with more than two decades of large current account surpluses (2014e: 5.3% of GDP), mainly due to the services account. This has resulted in a significant net international investment position of 205% of GDP.
The financial sector is very large (70x GDP) and accounts for roughly 24% of gross value added and 11% of employment.
According to a press release, the rating reflects that Luxembourg performed well throughout the global financial crisis with a 5-year average growth of 2.5%, "compared with 0.6% for the euro area and 1.6% for 'AAA' peers."
Fitch highlights that the "general government debt estimated to be 24.2% of GDP, and a government surplus of 0.2% of GDP in 2014, outperforming the 'AAA' median."
Key quotes:
Real GDP growth is estimated to be 2.8% in 2014, and then forecast to slow slightly to 2.3% in 2015, before accelerating to 2.7% in 2016.
Inflation has been weakening, with the annual average falling to 0.7% in 2014, but is forecast to increase to 1.5% in 2015, due to the VAT increase.
Public finances are a key rating strength, with general government debt estimated to be 24.2% of GDP, and a government surplus of 0.2% of GDP in 2014, outperforming the 'AAA' median.
Luxembourg's external position is strong, with more than two decades of large current account surpluses (2014e: 5.3% of GDP), mainly due to the services account. This has resulted in a significant net international investment position of 205% of GDP.
The financial sector is very large (70x GDP) and accounts for roughly 24% of gross value added and 11% of employment.