S&P keeps Netherlands AAA rating on negative outlook

14th January 2013, Comments 0 comments

Standard & Poor's affirmed Monday the Netherlands's top AAA rating but kept it on negative outlook, warning the government's plans to cut the budget deficit could falter.

While praising the government's track record on fiscal policy, S&P noted that the Dutch economy is heavily dependent on exports and therefore vulnerable to shocks from its eurozone partners.

"We believe the risks of fiscal slippage could rise substantially should this year's economic growth fall significantly below our current assumption of 0.3 percent," said the ratings agency in a statement.

The eurozone is widely expected to continue to contract in 2013.

The Dutch government aims to push down the public deficit to the EU limit of 3.0 percent this year from an estimated 3.7 percent in 2012.

The ratings agency noted that the country's debt was set to continue rising from 62 percent of GDP as the deficit remains higher than growth.

S&P also warned the country faces a risk from a drop in property prices hitting highly indebted homeowners.

"The continuing decline in house prices and the uncertain external environment are pushing up precautionary savings, hence weighing on domestic consumer demand," it said.

© 2013 AFP

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