Fitch affirms Latvia’s credit rating at A– with stable future outlook

International credit rating agency Fitch Ratings maintains Latvia’s Long-Term Foreign-Currency Issuer Default Rating at ‘A–‘, maintaining stable future outlook.

Fitch notes the main factors that maintain Latvia’s credit rating at A– include strong state finances, institutional strengths and credible policy framework secured by membership in the EU and Eurozone.

Among Latvia’s flaws, Fitch mentions low income level of the country’s residents, as well as high fluctuation of GDP and external debt level when compared to other countries with a similar credit rating.

Fitch notes that last year Latvia’s economy grew 4.8%, registering the most rapid growth in the past seven years. Economic growth mainly benefited from very strong investment activity in the second half of the year. The agency predicts investment growth will continue this year and the next.

Fitch predicts Latvia’s average GDP growth will be around 3.1% this year and the next. Fitch believes Nordic banks will continue playing a major role in Latvia and that the domestic banking sector will not be affected by development of non-resident sector.

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