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Fitch cuts outlooks on four new EU countries

Fitch Ratings lowered its credit rating outlook from stable to negative for Bulgaria, Estonia, Latvia and Romania, citing deteriorating economic imbalances.

The rating agency estimates 2007 current account deficits at 25% of GDP in Latvia, 19.5% in Bulgaria, 16% in Estonia, 14% in Romania and 13.7% in Lithuania, Fitch Raitings released a similar outlook revision to negative for Lithuania on December 2007. Booming consumer demand in the three Baltic states along with Romania and Bulgaria have led to the widest current-account deficits of all 105 countries watched by Fitch. Easily accessible loans are spurring inflation and boosting imports of consumer goods and fueling overheating concerns. Fitch says inflation has risen sharply, weaker euro area GDP growth will adversely affect exports, while delays to euro adoption timetables exacerbate external financial risks. Standard & Poor’s said on Wednesday it was downgrading Lithuania and giving it a negative outlook due to budget laxity which it said would be difficult to manage during an upcoming economic slowdown. (Gazdasági Rádió)
 

Credit rating outlook in the region / January 2008 tabell
 

                            S&P         Fitch      Moody’s
Hungary:         :     BBB+        BBB         A2
Czech Republic :      AA            A1
Slovakia          :      AA            A1
Slovenia          :      AA            AA         Aa2
Poland             :      A–            A–         A2
Romania          :     BBB–        BBB       Baa3
Russia             :     BBB+       BBB+      Baa2
Croatia            :     BBB–        BBB–      Baa3
Bulgaria           :     BBB+        BBB       Baa3
Ukraine           :       BB–         BB–         B1
Estonia            :       A              A           A1
Latvia              :     BBB+          A–         A2
Lithuania         :       A–            A           A2