Fitch changes Latvia’s outlook to negative
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Fitch Ratings has revised Latvia’s sovereign credit rating outlook to negative from stable and affirmed the debt grade at "A-", citing as the main trigger behind the revision a deterioration in Latvia’s fiscal outlook for 2020-21 associated with a near-term contraction in economic output and higher spending needs from the COVID-19 pandemic.
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The Latvian authorities have put in place concerted efforts to halt the spread of the outbreak and limit economic and social impact. Nevertheless, considerable uncertainty remains about the duration of the coronavirus outbreak and its lingering impact on Latvia and its trading partners, Fitch Ratings said on April 10 .
The affirmation of the rating reflects Latvia’s still-modest public debt levels relative to peers, and its institutional strengths underpinned by EU membership and the benefits of eurozone reserve currency flexibility.
Fitch said it expects the COVID-19 pandemic to have a large disruptive effect on Latvia’s small and open economy, with gross domestic product contracting by close to 7% in 2020, an almost 10 percentage points downward revision compared with its previous forecast.
Standard & Poor’s credit rating for Latvia stands at "A+" with a stable outlook. Moody’s credit rating for the country is set at "A3" with stable outlook.
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