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Fitch Ratings has revised the outlooks on the Netherlands to negative from stable, and has affirmed the long-term foreign and local currency Issuer Default Ratings (IDR) at ‘AAA’, the agency reported on Tuesday.
“The Outlook revision to Negative from Stable reflects Fitch’s view that the leveraged Dutch economy has suffered a number of shocks,” Fitch said in a press release.
As “house prices are declining at a rapid pace and the housing market correction is sharper than what the agency previously expected,” the agency concluded that the situation “will continue to weigh heavily on household consumption and consumer confidence.”
“Secondly, as highlighted by last week’s nationalisation of SNS Bank N.V., some banking system problems persist, with three of the four major banks having faced severe financial difficulties and needing external support since 2008,” Fitch said.
The agency also said the level of public debt, which is expected to peak at 77 per cent of GDP, is higher than most ‘AAA’ peers, which “reduces fiscal policy options.”
Fitch affirmed the country’s ‘AAA’ sovereign rating due to the Netherlands’ “flexible, diversified, high-value-added and competitive economy as well as its current account surpluses and positive net international investment position.”
Fitch also affirmed the Netherlands’ Country Ceiling at ‘AAA’ and short-term foreign currency IDR at ‘F1+’.