Moody’s confirms Austria’s Aa1 rating – stable outlook | 12/15/21
The rating agency Moody’s left its rating for the Republic of Austria at Aa1.
The outlook also remained unchanged at “stable”. Austria benefits from a diversified and prosperous economy, strong institutions and high debt affordability. On the other hand, the increased debt burden paired with low trend growth is a challenge, writes the agency.
Compared to other countries with a similar rating, Austria has a high debt burden. In addition, the trend growth for the years 2016 to 2025 is only 1.6 percent. That is lower than in other countries with an Aa1 or Aaa rating, where the median trend growth is 2 percent. However, Austria benefits from the very high affordability of debts, which should remain stable in the foreseeable future, according to Moody’s.
Another plus is the effectiveness of public institutions and politics. These have also shown themselves in the rapid response to the corona crisis. The latest government crises – allegations of corruption and personnel damage in the government – would not pose a lasting threat to Austria’s political stability, but they were “emblematic of Austria’s general government problems,” writes the rating agency.
“However, we assume that Austria’s recovery will depend on the further development of the pandemic, especially since the Omicron variants represent hurdles for global recovery as new restrictions come into force”, Moody’s writes. Nevertheless, the analysts are further and expect that Austria’s economy will recover in 2022 and that real economic growth will rise above the level of 2019.
For 2021, Moody’s is forecasting real GDP growth of 3.9 percent for Austria, and growth should then be 4.5 percent in 2022, after having shrunk by 6.7 percent in 2020.
bel / phs
(APA)
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