The rating agency Fitch Ratings maintained this Friday the rating of France’s long-term debt at “AA”, still with a “negative” outlook due to the pandemic that has increased public spending. “Covid-19 has left a public debt significantly higher than in previous years,” he said in a statement. The rating assigned to France is the third best on Fitch’s rating scale, which has 22 levels. Corresponds to a high quality transmitter.
The rating agency highlights that although the public deficit has fallen in 2021 and even more than expected, the macroeconomic outlook is clouded by the war in Ukraine and inflation. “The pace of growth in economic activity slowed during the first half of the year as consumer spending slowed significantly,” notes Fitch Ratings. Thus, it foresees a growth of 2.4% throughout 2022, close to the INSEE forecasts, which announced last week that it had a growth of 2.5%.
Inflation at its highest point
Fitch then estimates the country’s growth at 2.1% in 2023 and 1.9% in 2024. As for the public deficit, the rating agency expects it to reach 5.2% of French GDP in 2022, when the The government has set a target of 5%. It is betting on a reduction in the deficit in the following years, to reach 4% in 2024. Finally, on the inflation side, the agency estimates that it should “slow down in the second half of the year, to reach 4.2 % at the end of the year”, based on the evolution of energy prices.
In July, the rise in prices reached 6.1% in one year, the highest figure since July 1985 according to INSEE.
France’s rating influences the conditions under which the country can borrow money on financial markets. In May 2020, Fitch had lowered the outlook for France’s long-term debt rating from “stable” to “negative”, fearing a deterioration in public finances and the economy in the face of the health crisis. Another rating agency, Standard and Poor’s, also rates France’s long-term debt “AA” but considers its outlook “stable.” She maintained that rating last October.
Source: BFM TV
