21-Sep-2010 7:42 AM

Fitch affirms Germany's rating; cites solid economic recovery

Fitch Ratings affirmed (20-Sep-2010) Germany’s long-term foreign and local currency issuer default ratings at AAA with a "stable" outlook, with the ratings agency also affirming Germany’s country ceiling at AAA and and short-term foreign currency IDR at F1+. Fitch stated the country's economic outlook has been enhanced by a robust macro-economic performance, mostly due to a strong recovery of exports and a pickup in investments, adding that Germany's recovery has taken a clear 'V' shape and is not at risk of dipping back into recession. Fitch raised its growth forecast for the country's 2010 GDP from 1.6% to 3.6%, although in the medium term that pace is likely to taper off, with the outlook for 2011 and 2012 at around 2%. Fitch warned that the banking sector will continue to be a source of potential risk. [more]

Fitch Ratings: "Germany's economic outlook has been enhanced, not only by its recent robust macroeconomic performance - mostly due to a strong recovery of exports and a pickup in investments - but also by its resilient labour market, with unemployment reaching a low not seen since 1991. On a more fundamental level, Germany continues to command one of the world's strongest net international investment positions (at 38% of GDP in 2009), affording it safe-haven investment status, as reflected in its benchmark spreads that have tightened significantly during the euro area crisis," Maria Malas-Mroueh, Associate Director in Fitch's Sovereign team.