The Netherlands kept its triple-A credit rating from Fitch, which said today the decision reflected the country's strong underlying economic, institutional and credit fundamentals.
The rating agency kept the outlook at negative, however, because of the Netherlands’ weak economic growth prospects.
Another rating agency, Standard & Poor’s, stripped the Netherlands of its top-grade AAA rating in late November, also citing its low growth prospects.
That left Germany, Luxembourg and Finland as the only members of the 17-nation euro zone with the coveted top rating from all three leading credit agencies.
Moody’s, which still rates the Netherlands triple-A with a negative outlook, will publish its next update on March 7th.
“The country’s flexible, diversified, high value-added and competitive economy benefits from strong domestic institutions, a track record of sound budgetary management and historically broad public and political consensus in support of fiscal discipline,” Fitch said in a statement.
“Public debt dynamics have worsened over time but remain within the tolerance for a ‘AAA’ rating.”
Fitch expects general government gross debt to peak at 80 per cent of GDP in 2018-19 and decline only slowly over the medium term, remaining at 76 per cent of GDP by 2022.
The rating agency also noted that there had been some sign of recovery in recent months, but said this is likely to be slow because of household deleveraging, declining house prices, and fiscal consolidation.
“Our latest forecasts are for the economy to stagnate in 2014 and to grow by 1 percent in 2015, unchanged from our previous rating review,” it said.
The Dutch economy grew 0.2 per cent in the third quarter of 2013 compared to the previous three months, and the government’s economic forecaster expects a contraction of 1.0 per cent for the whole of 2013, followed by modest growth of 0.5 per cent in 2014.
The budget deficit in 2013 and 2014 is forecast to exceed the European Union ceiling of 3 per cent of economic output, while successive rounds of austerity measures to bring down the deficit have taken a toll on spending and confidence.
However, the first glimmers of recovery came in the housing market earlier this month with news that home sales rose at the fastest pace since mid-2008 in the final quarter of 2013.
Home prices have tumbled an average 18 per cent since the peak of the financial crisis in 2008, dragging down consumer spending and the wider Dutch economy. (Reuters)
