Economic News

Scope Ratings is projecting a rebound in CEE-11 growth from an estimated, weak 0.7% in 2023 to 2.5% this year and 3% in 2025. Growth will be driven by lower inflation and higher real wages.

The shift of Türkiye’s monetary policy after the general elections last year has reduced risks of a deeper balance-of-payments crisis. If sustained, current policy would improve credit fundamentals.

Scope Ratings’ baseline for 2024 is for a soft landing for the global economy, a turn of the global rate cycle, fiscal pressure, and ongoing geopolitical risk.

The UK’s debt-to-GDP ratio is set to rise above official forecasts given continued pressure for more spending unless future governments raise revenues, reduce the welfare state or significantly improve growth.

Climate and demographic risks have an important if moderate impact on public debt trajectories for most EU countries but become increasingly credit-rating relevant and mutually reinforcing in the long run.

The constitutional court ruling underlines Germany’s strong fiscal framework but complicates the government’s ability to address persistent under-investment of around EUR 300bn over the past decade.

A wider Middle East conflict could adversely impact the credit ratings of some euro-area sovereigns if this resulted in further monetary-policy tightening to tame renewed rises in inflation, and thus weaker growth.

The French government is counting on an end to emergency support, more efficient public spending and above-potential GDP growth to reduce public debt. It is an optimistic plan given challenges ahead.

Unavoidable spending by EU States is limiting funds needed for defence and green investment, testing NATO targets and climate goals. Shifting spending to the supranational level and carbon taxes could help.

The Tusk coalition will have beaten the odds if it secures a parliamentary majority. The change of government supports the country’s credit standing, despite potential governance and budgetary challenges.

The escalation of the Israeli-Palestinian conflict increases credit risks for Israel in the first instance but there are potentially deeper implications if the conflict spills over to the wider Middle East.

An extended period of higher euro area interest rates is testing governments’ debt management as financing costs rise, adding urgency to the need for fiscal reforms to create space for spending priorities.

Italy’s fiscal consolidation and compliance with forthcoming EU rules is critical to ensure eligibility of Italian securities under the ECB’s TPI, which is a key driver of its BBB+/Stable Outlook rating.

The risk of policy mistakes has increased as China’s authorities try to tackle financial imbalances, including high local government debt, while shifting towards a consumption-led growth model.

The Turkish central bank’s unexpectedly hawkish shift in policy helps rebuild credibility in inflation targeting but fast-rising consumer prices will test the commitment to the current monetary stance.

Scope Ratings senior writer Keith Mullin interviews Dennis Shen, lead analyst for Greece, after Scope Ratings’ upgrade of Greece to an investment-grade (IG) rating of BBB-.

Scope Ratings has never rated the United States AAA. Ever since the agency published AA ratings on the US in September of 2017, Scope has never rated the borrower higher than this level.

High headline inflation will continue to decline in the 11 EU countries of Central and Eastern Europe (CEE-11) but tight monetary policy and weak external demand are muting the economic recovery.

Italy’s high public debt, elevated annual gross financing needs around 25% of GDP, and rising interest costs are a major rating constraint, underscoring need for multi-year fiscal consolidation.

A curtailed currency devaluation and slow privatisations cloud the outlook for stabilising Egypt’s external finances. Meeting IMF conditions is critical for shoring up reserves and investor confidence.