S&P Global Ratings affirms Latvia's credit rating
The agency emphasizes the lower-than-expected impact from the spread of Covid-19 pandemic to the economy, as well as the maintenance of moderate public debt, as the main factors underlying the credit rating.
The agency highlights the beginning of the recovery of Latvian economy in the last months and the possibility for GDP to return to the level of 2019 already in 2021. S&P Global Ratings expects that in the next 12 months the economic recovery will be even faster. The support measures implemented by the government, as well as the absorption of European Union funds will promote economic growth also in the medium term. The agency forecasts that Latvia's net debt burden will decrease next year.
Although S&P Global Ratings believes that there is still fragmentation of political parties in the Latvian government, policy-making in Latvia is effective and provides significant support for the country's credit rating. As an example, the agency note Latvia's ability to recover from previous financial and economic shocks, including 2007-2009 financial crisis.
The agency notes that Latvia's credit rating could be upgraded if economic indicators compared to other countries continue to improve, following a strict fiscal policy. At the same time, S&P Global Ratings points out that low income level and long-term demographic challenges remain the main factors limiting Latvia’s credit ratings.
The previous S&P Global Ratings announcement was published on February 12, 2021, when the agency affirmed Latvia's credit rating at “A +” with stable outlook.
Full announcement is in the S&P Global Ratings official web page (registration necessary).