Moody's on Friday said Austria would retain its AAA rating due to its "well diversified economy," low unemployment rate and financial strength. A statement said the decision took into account the Alpine nation's "high economic strength, thanks to a skilled labour force and a competitive export sector that have helped Austria to grow faster than the European average in recent years."
"In so doing, Austria has achieved high average incomes, a well-diversified economy and structurally low unemployment," the statement said. Austria has the lowest unemployment rate in the European Union with 4.1 percent of the active population jobless in October.
Moody's also hailed Austria's decision to pass a "golden rule" law early this month obliging the government to limit the structural or non-cyclical federal deficit to 0.35 percent of gross domestic product from 2017. "It is an important characteristic of AAA-rated sovereigns that they implement speedy and decisive policy action if problems emerge," the statement said.
"Austria's payment capacity, as indicated by its low interest to revenue ratio of around 6%, is substantial and the government's ability to reverse the adverse debt dynamics is seen as strong based on the good track record of achieving and maintaining very low budget deficits over an extended period." Austria's deficit is expected to fall to 3.9 percent of GDP this year and 3.2 percent next year, while debt is set to inch up from 73.6 percent of GDP this year to 74.6 percent in 2012. Excessive debts, built up after decades of countries living beyond their means, are one of the main factors behind the eurozone crisis, with investors unwilling to buy bonds issued by countries already deep in the red.
Comments
Comments are closed for this article.