Germany retained a stable outlook for its top credit rating at Fitch Ratings, the second time in less than a week the country’s prospects were seen unchanged after Moody’s last month warned the nation’s Aaa grade was at risk.
“The affirmation reflects Germany’s longstanding credit strengths and robust economic performance over the past two years,” Fitch said today in an e-mailed statement. “Against the background of fragile global recovery and the intensification of the euro-zone crisis, Germany has recorded strong” economic growth, partly as a result of policy changes.
Even so, a deepening economic contraction in large euro- region countries could push Germany into recession, with repercussions for the fiscal position of Europe’s biggest economy, Fitch said.
Germany is the largest contributor to Europe’s bailout fund and to the rescue packages for Greece. Any further collapse of the Greek economy and subsequent exit from the euro region has the potential to destabilize the finances of Chancellor Angela Merkel’s government and derail efforts to balance the budget.
Additional contributions to the euro region’s bailout funds could push German debt above 90 percent of gross domestic product, “close to the upper limit Fitch generally considers consistent with a ‘AAA’ rating,” Fitch said. Germany’s rating would be threated if these risks were to materialize, it said.
Moody’s on July 23 lowered the outlook for the Aaa credit ratings of Germany, the Netherlands and Luxembourg to negative, citing “rising uncertainty” over Europe’s debt woes.
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