Fitch affirms Germany at AAA, outlook Stable

On Sunday, the US-based rating agency, Fitch Ratings, affirmed Germany’s sovereign credit rating at AAA while maintaining a Stable outlook.

Key Findings:

“Germany's 'AAA' rating reflects its diversified, high value-added economy, strong institutions and track record of sound public finances. Germany's position as the primary benchmark issuer for the eurozone affords it significant financing flexibility.

General government debt is on a firmly downward path, forecast to have fallen just below 60% of GDP by the end of 2019, albeit still higher than the current 'AAA' median of 44%.

The large structural current account surplus supports the country's net external creditor position.

Germany's highly open, export-oriented economy is suffering from weakness in external demand as illustrated by the contraction in manufacturing. The contribution of net exports to GDP growth was -0.4pp in both 2018 and 2019 and is forecast to remain negative in 2020 and 2021.

Despite the economic weakness, the budget surplus remained above 1% of GDP in 2019 following a record surplus of 1.9% of GDP in 2018. The fiscal performance benefited from robust tax revenues, generated by strong domestic demand, and the resilient labor market in particular.

The budget balance has been in surplus since 2014, and compares favorably with the current 'AAA' median of a 0.2% deficit.”

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