Japanese credit rating agency R&I upgraded Latvia`s credit rating.
R&I outlines that Latvia`s rating is supported by expected continuous growth of economic of Latvia, disciplined fiscal policy, and low level of government debt. Agency positively evaluated increased stability of the financial system stemming from structural changes, including fields of money laundering and combating the financing of terrorism, supervision of financial sector and reduction of non-resident deposits.
R&I notes that the entire banking sector is enjoying solid earnings, with capital and liquidity adequacy well above regulatory requirements. Residents banking services have become the dominant business of Latvian banks and non-resident deposits declined by 74% compared to end of 2015.
The agency expected economic growth to decelerate in 2019 to 2,5% and in 2020 to 2,6%, due mainly to a slowdown in investments partly resulting from a peaking-out of inflow from European Union funds and a fall in exports.
The agency considers, even if the labor market is strong and wages are rising steadily, the impact of demography shifts will be a challenge. Latvia’s population keeps falling owing to continued outflow to the other euro area countries, combined with a natural decline and it can weight on social security and healthcare spending.
The previous credit rating announcement was published on October 11th, by international rating agency Fitch Rating Limited and affirmed Latvian credit rating for long-term local and foreign currency retention of "A-" with stable outlook.
The full text of a publication is available on the Agency’s R&I web page.