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S&P upgrades Ireland's credit outlook as debt falls | S&P upgrades Ireland's credit outlook as debt falls |
(about 3 hours later) | |
Standard & Poor's has upgraded its credit outlook for the Republic of Ireland from "stable" to "positive", arguing that the country's debts are falling faster than expected. | Standard & Poor's has upgraded its credit outlook for the Republic of Ireland from "stable" to "positive", arguing that the country's debts are falling faster than expected. |
"Ireland's economic recovery is under way", it said. | "Ireland's economic recovery is under way", it said. |
Ireland lost its AAA credit rating in 2009 following the global financial crisis and it now stands at BBB-plus | Ireland lost its AAA credit rating in 2009 following the global financial crisis and it now stands at BBB-plus |
But S&P said there was a one-in-three chance it would raise the country's credit rating in the next two years. | But S&P said there was a one-in-three chance it would raise the country's credit rating in the next two years. |
"The outlook revision reflects our view that Ireland's general government debt burden is likely to decline more rapidly, as a percentage of GDP, than we had previously expected," S&P said in a statement. | "The outlook revision reflects our view that Ireland's general government debt burden is likely to decline more rapidly, as a percentage of GDP, than we had previously expected," S&P said in a statement. |
It expects that national debt will fall from 122% of gross domestic product (GDP) in 2013 to 112% by 2016. | It expects that national debt will fall from 122% of gross domestic product (GDP) in 2013 to 112% by 2016. |
Moody's remains the only credit agency still rating Ireland's debt as "junk". | Moody's remains the only credit agency still rating Ireland's debt as "junk". |
The Republic of Ireland had to ask eurozone countries and the International Monetary Fund for bailout loans worth 80bn euros following the near collapse of its banking and property sectors. | |
It has since focused on reducing government spending and trying to return to economic growth. | It has since focused on reducing government spending and trying to return to economic growth. |
In April, eurozone finance ministers rewarded the country's efforts by giving Ireland more time to repay its bailout loans. | In April, eurozone finance ministers rewarded the country's efforts by giving Ireland more time to repay its bailout loans. |
"When you look at some of the cliff-hangers we have had in the rest of the periphery, Ireland has kept its head down and got on with it and I think that has been recognised," said Philip O'Sullivan, chief economist at NCB Stockbrokers. | "When you look at some of the cliff-hangers we have had in the rest of the periphery, Ireland has kept its head down and got on with it and I think that has been recognised," said Philip O'Sullivan, chief economist at NCB Stockbrokers. |
But while there are some positive signs of recovery - falling unemployment and a stabilisation in house prices, for example - its economy contracted by 0.6% in the first quarter of 2013 as exports slowed and domestic spending shrank. | But while there are some positive signs of recovery - falling unemployment and a stabilisation in house prices, for example - its economy contracted by 0.6% in the first quarter of 2013 as exports slowed and domestic spending shrank. |
The country is technically back in recession for the first time in four years. | The country is technically back in recession for the first time in four years. |
Despite this, S&P believes the Irish economy still has the potential to grow by 2% a year, in marked contrast to other eurozone bailout countries such as Greece and Portugal. | Despite this, S&P believes the Irish economy still has the potential to grow by 2% a year, in marked contrast to other eurozone bailout countries such as Greece and Portugal. |
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