- POSTED: 07 Jun 2014 04:09
Standard & Poor's revised up Ireland's sovereign credit rating to 'A-' with a positive outlook, from its previous 'BBB+' assessment, citing the Eurozone member's improved domestic prospects.
LONDON: Standard & Poor's (S&P) on Friday revised up Ireland's sovereign credit rating to 'A-' with a positive outlook, from its previous 'BBB+' assessment, citing the Eurozone member's improved domestic prospects.
In contrast, the ratings agency held Italy's credit rating at 'BBB', which is two notches above junk level, and maintained its negative outlook.
"The (Irish) upgrade reflects our view of the brightening prospects for Ireland's domestic economy, which we expect to underpin further improvements in the government's financial profile, capital markets access, and financial system asset quality," S&P said in a statement.
The agency also ramped up its 2014-2016 average gross domestic product (GDP) growth projections for Ireland to 2.7 per cent from 2.0 per cent previously.
"We believe the domestic recovery is broadening and has gathered pace in the first quarter of 2014," S&P added.
"Full-time employment grew by 2.3 per cent from the 2013 March quarter to the 2014 March quarter, with the unemployment rate estimated to have declined to 11.8 per cent in May 2014, the lowest since April 2009."
S&P was encouraged by the economic and financial progress being made in Ireland, which exited a tough three-year EU-IMF bailout program in December 2013.
Ireland's net general government debt was forecast to peak at 127 per cent of GDP in 2013, and to fall to 112 per cent by 2017.
"We also link our expectation of improving budgetary performance to strengthening domestic economic conditions, as well as Ireland's track record of meeting its stated fiscal goals since entering into an EU-IMF programme in 2011," S&P said.
It added: "In 2014, we expect the general government deficit to be about 5.1 per cent of GDP, on the back of spending control and, to a lesser extent, out-performance of tax receipts."
S&P added that foreign direct investment (FDI) in Ireland was expected to boost the nation's economic growth between 2014 and 2016.
In 2013 alone, Ireland attracted FDI inflows totalling 26.7 billion euros, or 16 per cent of GDP, according to the agency.
Ireland exited a tough three-year bailout program of the International Monetary Fund and European Union in December, necessitated by a banking crash and the implosion of the housing market in 2010.
Under the programme, the government was pressed to implement austerity measures to shore up its finances.
Following its bailout exit, Dublin returned to commercial debt markets for funding in January 2014.