Moody's downgrades Dutch economic outlook to negative

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Moody's downgrades Dutch economic outlook to negative

Ratings agency Moody’s has downgraded the economic outlooks in the Netherlands, German and Luxemburg from stable to negative, due to developments in the eurozone.

Moody’s said it has revised its position on the Netherlands because of rising uncertainty about the outcome of the euro area debt crisis, the rising liabilities the Dutch government will assume as a result efforts to tackle the crisis and the country’s own ‘domestic vulnerabilities’. These include the the weak growth outlook, high levels of household debt and falling house prices.

In particular real disposable incomes are expected to fall by nearly 4% in total in 2012-13, the rating agency said.

Amplifying changes

Negative developments in the eurozone are amplifying these negative trends, which are in turn contributing to weak confidence and an overall contraction in domestic demand, Moody's said.

‘This dynamic creates additional fiscal headwinds and means that the Dutch government's debt burden will begin to fall later and from a higher level,’ the report, issued on Monday, stated.

While the Netherlands Triple A credit rating is unchanged, this does mean a downgrade could be on the cards, Nos television reported.



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