S&P Global Ratings rates 30 developed sovereigns in Europe, 22 of which are European Union members and 19 of which make up half the OECD membership. Twelve of the 30 developed sovereigns are very small economies with GDP of less than $80 billion (compared to over $1 trillion on average for the larger 18); seven of these small economies have outsized financial sectors, though financial entities often are specialized and ring-fenced from their domestic economies. This leaves 18 large wealthy diversified economies, including four of the largest 10 economies globally (Germany, the U.K., France, and Italy).

Western Europe's proximity to the war between Russia and Ukraine, and its historical reliance on Russian gas, appeared to have pushed it to the brink of recession in 2023. The second-round effects on developed European economies' balance of payments, fiscal positions, and inflation rates led us to introduce a number of negative outlooks--seven in total last year--for Estonia, France, Guernsey, Latvia, Lithuania, Slovakia, and the United Kingdom. In particular, the small, open, energy-intensive economies close to the conflict saw a sharp run-up in inflation, and a worsening of their current account positions, which could undermine their competitiveness (notably Latvia, Lithuania, and Slovakia).

Costly interventions to mitigate the drain on growth and confidence from the pandemic and the war have consumed most of European sovereigns' remaining monetary and fiscal flexibility. Between 2019 and end-2022, debt to GDP in the six largest European economies increased by an average of 11 percentage points (ppts). In only one of the big six, Germany, do we see debt to GDP shifting onto a steep downward path over the next three years; in contrast, smaller economies running primary budgetary surpluses--including Greece, Cyprus, Portugal, and Ireland--are projected to reduce debt to GDP by between 9-17 ppts of GDP over the same period. Overall, we expect budgetary consolidation to slow down in 2023, with several countries likely posting higher budget deficits compared to 2022 (Belgium, France, Slovenia). Following a very strong year for budgetary performance, especially on the revenue side--which allowed governments to fund policy measures aimed at cushioning the adverse impact of inflation on households and businesses--inflation has crept into 2023 budgets via the indexation of pension payouts, and public wages. On the revenue side, the slowdown in economic growth augurs a less dynamic evolution of government revenues this year.

A key impediment to lowering debt to GDP is the much higher cost of new debt today compared to a year ago. Monetary dominance is reasserting itself at the ECB and Bank of England (BOE), as underlying inflation remains elevated. With the ECB scheduled to begin the long process of offloading its asset purchases in March, and the BOE already actively selling Gilts back into the market, commercial investors will be expected to absorb additional government securities. Regardless of the recent compression in euro area yields, this still implies more volatile refinancing costs this year compared to the recent past, and a higher overall cost of new debt, alongside considerably lower market tolerance for any large and unexpected fiscal policy shifts. This is the particularly the case for the U.K., where quantitative tightening is imposing a fiscal cost, given that the Treasury indemnified the BOE against any losses on the government debt it acquired under its pandemic-related asset purchase program, the Asset Purchase Facility. That decision shortened the effective maturity of U.K. debt to around two years, making it much more sensitive to the recent run-up in borrowing costs compared to euro area debt profiles; on top of this, the U.K. has the highest share of inflation-indexed debt as a percentage of total debt, at 26%.

Despite the large negative balance to our outlooks on European developed sovereign ratings, there are some grounds for optimism. Rapid progress by European governments in finding alternative energy supplies, a large cutback in gas consumption by European households, propitious weather patterns, EU fund inflows, and resilient export sectors (also reflecting the reopening of China's economy) support S&P Global Ratings' view that the euro area as a whole will avoid recession this year. Additional causes for optimism include firmer January PMIs especially in the services sectors; resilient early 2023 hiring numbers; and perhaps most notably the fall in TTF benchmark natural gas futures in the last few weeks back to pre-war levels. Depending on the tariff and tax structure, the decline in cash-futures energy prices is already translating into steep reductions in household power and heating tariffs; in Italy, these are projected to drop by 20%-30% as of Feb. 1. Importantly, at the beginning of 2023, EU gas inventories reached 83% of capacity, with Germany and Italy at 90% and 82% of storing capacity respectively. In our view, these comfortable inventory levels imply that the likelihood of gas rationing in the EU is remote during 2023. Finally, the €800 billion in Next Generation EU Funds is only just starting to make a difference to economic activity (and will help offset the necessary fiscal tightening at the national level). These funds are conditional on the implementation of a series of pro-growth structural reforms at the national level.

Because energy prices are a larger driver of euro area inflation compared to other advanced economies (contributing 38% to headline versus just 14% in the U.S.), relief has also been forthcoming on the inflation front. The all-items HICP dropped nearly 1 ppt in the 12-month data for December 2022, with another drop expected in January. Lower natural gas prices should also give governments greater fiscal flexibility to unwind energy subsidies and phase-out VAT and other tax exemptions on energy products (albeit with a considerable lag given political considerations).

The appreciation of the euro (by 13.4% since end-September 2022) has also stoked optimism that disinflation will happen earlier and faster than previously projected, though there are diverging views on where euro area headline inflation ultimately settles. While headline euro area inflation has been moderating, core inflation continues to trend upward, which suggests that underlying inflation may be entrenched. We project the ECB deposit rate to peak at 3% (versus 2% at present) in the first half of 2023. A significantly more substantial increase in the policy rate would likely lower core inflation faster, but this could tip the economy back toward a recession with adverse implications for consumption and investments as well as for asset quality in the banking system.

Reflecting these developments, euro area sovereign yields have narrowed considerably over the last month--by 42 bps in Italy to 4.08%; 28 bps in Spain to 3.22%; 26 bps in France to 2.70%; and 20 bps in Germany to 2.23% as of Jan. 27. Despite the rapid increase in the government's nominal costs of borrowing, when adjusted for the GDP deflator or inflation, monetary conditions do not appear restrictive in real terms.

Revised EU Fiscal Rules

For 2023, the election calendar for developed sovereigns is on the quieter side. On March 5, parliamentary elections in Estonia will take place, followed by Finland one month later, then general elections in Greece between April and July. In the second half of the year, voters in Luxembourg will be invited to participate in the elections in October and in Spain no later than Dec. 10 (see below).

Perhaps the more relevant political-economy decision at the EU level will be the Commission's efforts to relaunch the EU fiscal framework with the backing of member states in time for its reapplication in 2024. The Commission proposal tabled last November is to simplify European fiscal rules and to reduce their cyclicality by basing them on net primary expenditure paths over a longer period (four years), and by eliminating past rules based on unrealistically low starting points for debt to GDP. The system will also likely implicitly accept that fiscal risks are higher in some member states than others, and where there is more risk there will be more surveillance. But for now, the Commission's communication on the new framework is only a proposal and will require support from all member states, including more sceptical northern European governments. Because the escape clause on the application of the fiscal rules expires at the end of this year, the Commission's aim is to get an agreement in principle among member states before they draft their 2024 budgets in the autumn. Some fiscal anchor will be required, and we therefore expect an agreement to be finalized by late this summer.

Greece

Following a solid 2022, we expect the Greek economy will slow down 2023, with real GDP growth currently projected at about 1.4%. Nevertheless, we expect that Greece's economic performance will surpass the eurozone average, partly due to the smaller share of energy and interest-rate sensitive sectors in its economy (industrial activity and construction make up 17% of Greek gross value added versus the EU average of 25%). Moreover, Greece's economy has over the last decade become much more open (with exports to GDP at 45%) and with a very large tourism sector employing 28% of all workers in the nonfinancial business economy. The economy will remain exposed to global economic conditions. Long-term challenges for the Greek economy include how to offset the drag on growth from a shrinking population by increasing labor activity in the economy, which is low compared to other European economies.

We believe that one of the key challenges for Greece this year will be to continue reducing its budget deficit amid the economic slowdown. The government targets a primary surplus in 2023, mainly supported by the gradual withdrawal of pandemic-related spending and the non-renewal of some energy-related support measures, and by the extraordinary windfall tax on electricity producers. Although we believe that an economic slowdown and potential additional government spending pressures ahead of the 2023 general election may hinder the government's ability to meet its budget balance target, we expect the budget deficit to decline further this year, placing government debt as a share of GDP on a discernible declining trajectory.

Factoring in this year's general elections, we believe the ongoing schemes related to debt relief and the return of profits from Greek bonds held by the ECB and eurozone national central bank as well as the available NGEU funds will encourage the next government to continue implementing structural reforms, regardless of the electoral outcome.

Italy

A new coalition government lead by Prime Minister Giorgia Meloni, from the right-wing party Fratelli d'Italia (FdI), assumed power in October 2022. In line with the September 2022 snap parliamentary elections results, the coalition also comprises the right-wing party Lega, and the two center-right parties, Forza Italia, and the smaller Noi Moderati. One of the government's first measures was to approve the 2023 budget, targeting a 4.5% of GDP fiscal deficit, remaining broadly in line with the previous government's prudent budgetary stance despite some controversial policies. Our forecast for the 2023 fiscal deficit is a more conservative 5.1% of GDP, reflecting our expectation that the Italian economy will contract by 0.1% in 2023 and assuming the government will extend some of last year's energy measures across the rest of 2023. We continue to anticipate a tightening fiscal stance because the government has very limited fiscal space given its high debt (147% of GDP in 2023) and the announced reactivation of fiscal constraints imposed on all EU member states by the Stability and Growth Pact in 2024.

The Italian economy has been unexpectedly resilient during 2022 and early 2023 (including surprising strength in private investment spending). Moreover, with the correction lower in natural gas futures, power and heating tariffs are set to fall by 20%-30% in early February, easing pressure on household budgets. Investment has been and will stay the main bright spot in the Italian economy, as both private construction investment and NGEU infrastructure spending continue at a brisk pace, although over the medium-term higher policy rates will moderate private investment. Lower energy prices (at least temporarily lower) could also ease the recent pressure on the government to keep tax relief and subsidies on energy consumption in place, providing some unexpected fiscal space. Later this year, there will still be questions about whether the government implements the reforms in its National Recovery and Resilience Plan, including the chapters on competition, justice, and public procurement. One risk is that the incoming government only selectively implements the remaining targets, hampering the full disbursement of the funds and denting economic performance. We believe, however, that the government has limited room to renegotiate the plan prepared by the Draghi-led government, and has shown signs of a more consensual approach to its relationship with the EU.

Spain

We project that the Spanish economy will avoid recession in 2023, with services and goods exports growth in real terms remaining resilient, while the recent decline in wholesale gas prices gives the government additional fiscal flexibility and supports firmer consumption than we currently project. Our headline GDP and consumption growth projections are just under 1%; we still expect Spain to operate a modest current account surplus. We foresee only modest budgetary consolidation between 2023 and 2025, with the general government deficit exceeding 3% of GDP even in 2025.

No later than Dec. 10, Spain is set to hold national parliamentary elections (with regional elections scheduled for May). The current minority PSOE-Podemos government is the first coalition government in Spain since 1978; given the increasingly fragmented Spanish electorate, this trend toward multi-party coalitions will likely continue. One potential risk is that the outcome of the elections proves inconclusive, leading to repeat elections as soon as spring 2024. Tensions around Catalan independence could also flare up, complicating the coalition building process. Another minority government would likely face similar challenges to the current one; a dependency on regional parties for the passage of key legislation, including the annual budget, as well a lack of consensus around what to do with Spain's high structural social security deficit. We estimate this at about 1.8% of GDP this year amid 8.5% inflation indexation of pensions and the accelerating demographic shift (though the strength of Spain's labor market, with a pick-up in wages growth, has boosted contributions). Moreover, in light of the upcoming elections, we do not exclude the sort of budgetary slippages we saw 2019, the last time general elections took place. All major parties support compliance with Spain's EU obligations, which would suggest that, regardless of the composition of the next government, a break from the current economic and fiscal policy settings is unlikely.

U.K.

S&P Global Ratings expects the U.K.'s general government deficit to average 4.5% of GDP over 2023-2025, taking into account the reversal of most of the tax-cutting measures that were announced in September 2022 as part of the minibudget. The largest cuts to primary expenditure are back-loaded to occur in the 2024-2025 fiscal year, which also overlaps with the next election, raising questions about their implementation. Moreover, the U.K.'s high stock of inflation-linked debt (26% of the total) and its short post-QE effective average debt maturity mean that high inflation passes through to higher borrowing costs much faster than in other advanced governments. As a consequence, we do not project that the authorities will put the gross debt-to-GDP ratio of 100% of GDP (85% at end 2019) on a downward path between now and end-2025. However, much will also depend on the economy's growth prospects. While we project that the economy will exit recession by the fourth quarter of this year, with inflation dropping relatively quickly, long-term growth potential is not expected to recover to the 2+% figures posted pre-2018, while the external deficit remains persistently high. Another fundamental concern is the U.K.'s persistently high current account deficits, and the relatively lackluster performance of the export sector, which pre-dates the global pandemic.

Table 1

Emerging Markets Sovereign Rating Strengths And Weaknesses
Issuer	Sovereign foreign currency ratings	Institutional assessment	Economic assessment	External assessment	Fiscal assessment, budget performance	Fiscal assessment, debt	Monetary assessment
Andorra	BBB+/Stable/A-2	3	2	5	1	3	5
Austria	AA+/Stable/A-1+	2	1	2	3	3	2
Belgium	AA/Stable/A-1+	3	1	2	3	4§	2
Cyprus	BBB/Stable/A-2	3	2§	5	1	4§	4
Czech Republic	AA-/Stable/A-1+	2	3	1	4	2	2
Denmark	AAA/Stable/A-1+	1	1	3	2	1	3
Estonia	AA-/Negative/A-1+	2	3	2	2	1	3
Finland	AA+/Stable/A-1+	2	1	4	2	2	2
France	AA/Negative/A-1+	2	1	4	4*	5	2
Germany	AAA/Stable/A-1+	2	1	1	2	2	2
Greece	BB+/Stable/B	3	3	5	3	6	2
Guernsey	AA-/Negative/A-1+	2	2	4	1	2	5
Iceland	A/Stable/A-1	2	2	3	3	4	4
Ireland	AA-/Positive/A-1+	2	1	4	2	3§	2
Italy	BBB/Stable/A-2	3	3	3	4	6	2
Jersey	AA-/Stable/A-1+	2	2	4	1	2	5
Latvia	A+/Negative/A-1	3	3	2	3*	2	3
Liechtenstein	AAA/Stable/A-1+	1	1	2§	1	2	3
Lithuania	A+/Negative/A-1	3	3	2	2	2	3
Luxembourg	AAA/Stable/A-1+	2	1	3	1	2	2
Malta	A-/Stable/A-2	3	3	2§	3*	2	3
Netherlands	AAA/Stable/A-1+	2	1	3	2	2	2
Norway	AAA/Stable/A-1+	1	1	1	1	1	1
Portugal	BBB+/Stable/A-2	3	3	5	1§	5§	2
Slovakia	A+/Negative/A-1	3	3	2	4*	2	2
Slovenia	AA-/Stable/A-1+	3	3	1	3	2	2
Spain	A/Stable/A-1	3	2	4	4	5	2
Sweden	AAA/Stable/A-1+	1	1	2	1	1	1
Switzerland	AAA/Stable/A-1+	1	1	1	1	1	2
United Kingdom	AA/Negative/A-1+	2	1	2	5*	5	1
1 (%)		16.7	46.7	16.7	33.3	16.7	10.0
2 (%)		43.3	20.0	33.3	23.3	43.3	53.3
3 (%)		40.0	33.3	16.7	23.3	10.0	20.0
4 (%)		0.0	0.0	20.0	16.7	10.0	6.7
5 (%)		0.0	0.0	13.3	3.3	13.3	10.0
6 (%)		0.0	0.0	0.0	0.0	6.7	0.0
Median		2.0	2.0	3.0	2.0	2.0	2.0
Mean		2.2	1.9	2.9	2.1	2.6	2.5
Standard Deviation		0.7	0.9	1.4	1.1	1.6	1.1
*Deterioration since June 2022. §Improvement since June 2022

Table 2

Developed EMEA Economic Outlook
	Real GDP growth (%)		GG balance / GDP (%)		Net GG debt / GDP (%)		Current account balance / GDP (%)		Narrow net ext. debt / CAR (%)
	2022 A	2023 A	2022 A	2023 A	2022 A	2023 A	2022 A	2023 A	2022 A	2023 A
Andorra	7.7	1.4	1.4	0.1	(24.0)	(25.0)	N/A	N/A	N/A	N/A
Austria	4.6	0.0	(3.4)	(2.8)	71.4	71.0	0.6	1.1	111.9	109.3
Belgium	2.8	0.2	(6.0)	(4.6)	97.3	97.4	(1.8)	(1.1)	82.5	80.0
Cyprus	6.0	1.7	(0.9)	(0.4)	77.5	74.4	(6.6)	(4.9)	137.5	127.5
Czech Republic	2.5	(0.3)	(4.6)	(4.4)	29.3	31.7	(3.6)	(3.9)	4.5	2.3
Denmark	2.8	(0.2)	0.5	0.2	10.2	10.3	8.5	8.3	35.9	31.7
Estonia	0.4	0.0	(2.1)	(2.7)	6.7	9.0	(1.4)	(1.2)	8.5	8.5
Finland	2.0	0.0	(1.5)	(1.9)	33.7	36.3	(2.7)	(1.2)	213.6	217.0
France	2.5	0.2	(5.0)	(5.4)	99.0	100.4	(1.4)	(1.2)	282.4	279.1
Germany	1.8	(0.5)	(3.2)	(2.1)	58.1	56.3	4.3	3.5	81.3	80.1
Greece	5.7	1.4	(4.0)	(2.6)	157.8	154.0	(7.1)	(7.9)	352.2	350.3
Guernsey	1.0	0.2	(2.6)	(4.2)	(75.8)	(74.0)	N/A	N/A	N/A	N/A
Iceland	5.8	1.9	(4.8)	(3.1)	39.2	39.8	(2.8)	(1.4)	53.2	56.9
Ireland	5.1	1.2	0.7	0.9	40.1	37.1	5.4	7.0	174.1	169.6
Italy	3.8	(0.1)	(5.6)	(5.1)	137.3	139.9	0.3	0.9	247.6	249.0
Jersey	2.5	5.9	(5.3)	(3.3)	(101.3)	(90.8)	N/A	N/A	N/A	N/A
Latvia	1.8	(0.5)	(6.0)	(4.0)	35.8	38.7	(5.3)	(4.9)	36.9	42.1
Liechtenstein	2.6	0.2	1.7	3.6	(100.4)	(103.1)	N/A	N/A	N/A	N/A
Lithuania	2.3	0.5	(1.6)	(3.9)	30.7	31.8	(4.2)	(2.5)	11.3	12.6
Luxembourg	1.5	1.0	0.1	0.5	(11.3)	(10.7)	2.3	3.5	211.9	220.1
Malta	6.5	2.0	(5.9)	(4.9)	46.8	49.6	(3.2)	(2.7)	44.0	41.0
Netherlands	4.4	0.1	(1.0)	(2.5)	44.1	44.9	5.0	4.3	165.8	160.4
Norway	2.8	1.2	18.5	13.0	(234.5)	(240.2)	24.6	20.4	(301.5)	(346.1)
Portugal	6.3	1.0	(1.7)	(0.7)	106.4	102.6	(1.1)	(1.1)	187.2	181.2
Slovakia	1.5	0.4	(4.0)	(4.8)	51.1	51.2	(4.7)	(4.5)	51.0	49.0
Slovenia	4.8	0.8	(3.5)	(4.5)	53.8	55.4	(0.1)	0.2	39.6	39.6
Spain	4.6	0.9	(4.4)	(4.0)	100.4	101.6	1.9	1.6	229.4	219.5
Sweden	2.6	(0.8)	(0.4)	(0.9)	23.4	22.7	4.2	4.1	121.8	119.3
Switzerland	2.2	0.5	(0.2)	0.2	17.2	16.7	5.3	4.1	1.5	(1.4)
United Kingdom	4.3	(1.0)	(5.5)	(5.8)	93.9	94.2	(5.3)	(4.0)	301.6	277.8

Andorra (BBB+/Stable /A-2)

• Analyst: adrienne.benassy@spglobal.com
• Latest publication: (Full Analysis) Andorra, Nov. 28, 2022

Rating score snapshot:

• Institutional assessment: 3
• Economic assessment: 2
• External assessment: 5
• Fiscal assessment – Flexibility and performance: 1
• Fiscal assessment – Debt burden: 3
• Monetary assessment: 5

Outlook: Stable

The stable outlook reflects our view that Andorra's recent track record of budgetary prudence and economic flexibility should enable it to manage mounting risks to growth, public finances, and the financial sector.

Downside scenario

The rating could come under pressure within 12-24 months if the adverse effects of the Russia-Ukraine conflict are more severe than anticipated, which would likely lead to a significant erosion of the country's growth rate, or an associated deterioration of the government's budgetary and debt positions beyond our projections. Heightened financial sector risks or a reversal of authorities' commitment to align with international financial standards could also trigger an outlook revision to negative or a downgrade.

Upside scenario

We could raise the ratings within 12-24 months if upcoming official estimates of Andorra's international investment position result in a stronger overall external assessment based on the economy's claims on liabilities to the rest of the world. We may also raise the ratings if the banking regulation and supervision framework further improves.

(Latest research update published on Jan. 14, 2022)

Table 3

Andorra
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	39.62	40.11	42.25	40.69	37.06	41.87	41.36	42.50	46.47	49.10
GDP growth	3.71	0.35	1.59	2.02	(11.18)	8.95	7.70	1.40	1.70	1.50
GDP per capita growth	1.76	(1.92)	(0.26)	0.22	(11.72)	6.87	6.63	0.40	0.69	0.50
Current account balance/GDP	N/A	N/A	N/A	18.01	15.54	15.94	N/A	N/A	N/A	N/A
Gross external financing needs/CAR&FXR	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Narrow net external debt/CAR	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
GG balance/GDP	4.36	3.32	2.67	2.28	(1.08)	(1.18)	1.40	0.10	0.70	1.00
GG net debt/GDP	(8.67)	(14.43)	(14.34)	(18.71)	(22.01)	(25.52)	(23.97)	(25.01)	(26.88)	(29.04)
CPI inflation	(0.40)	2.58	1.10	0.50	0.10	1.73	6.10	3.00	1.60	1.60
Bank credit to resident private sector/GDP	166.54	150.05	150.85	140.36	156.26	141.61	125.23	119.67	115.70	112.09

Austria (AA+/Stable /A-1+)

• Analyst: michelle.keferstein@spglobal.com
• Latest publication: Austria Outlook Revised To Stable From Positive On Rising Economic Risks; 'AA+/A-1+' Ratings Affirmed, Aug. 26, 2022

Rating score snapshot:

• Institutional assessment: 2
• Economic assessment: 1
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 3
• Monetary assessment: 2

Outlook: Stable

The stable outlook balances our view of Austria's solid macroeconomic and credit metrics, including our expectations on economic growth and further budgetary consolidation, against the rising risks to the economy emanating from the combination of high inflation and dependence on Russia for energy supplies.

Upside scenario

We could raise our ratings on Austria if the current risks to energy supplies fade and budgetary consolidation accelerates, with the government's debt burden as a share of GDP remaining on a clearly discernible downward trajectory.

Downside scenario

We could lower the ratings if the adverse effects of the Russia-Ukraine conflict were to materially weaken the economic growth outlook, or if budgetary and current account outcomes were significantly worse than our current projections.

Table 4

Austria
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	45.50	47.56	51.58	50.19	48.90	53.77	52.34	54.08	60.76	64.15
GDP growth	1.99	2.26	2.43	1.52	(6.45)	4.56	4.60	0.00	2.00	1.70
GDP per capita growth	0.64	1.41	1.85	1.10	(6.90)	4.19	3.76	(0.48)	1.51	1.21
Current account balance/GDP	2.72	1.37	0.90	2.38	2.98	0.35	0.57	1.05	1.60	1.88
Gross external financing needs/CAR&FXR	185.05	175.28	180.77	178.16	185.69	182.50	180.96	182.96	175.68	174.20
Narrow net external debt/CAR	109.88	121.87	104.26	103.21	131.47	109.38	111.88	109.30	100.02	97.87
GG balance/GDP	(1.53)	(0.82)	0.17	0.61	(8.01)	(5.93)	(3.40)	(2.80)	(1.80)	(1.20)
GG net debt/GDP	75.41	72.06	69.00	65.71	75.44	75.82	71.41	70.98	69.71	68.60
CPI inflation	0.97	2.23	2.12	1.49	1.39	2.76	8.50	7.00	3.00	1.60
Bank credit to resident private sector/GDP	115.27	108.25	106.38	108.29	116.87	114.20	109.69	109.69	109.69	109.69

Belgium (AA/Stable/A-1+)

• Analyst: sebastien.boreux@spglobal.com
• Latest publication: Belgium 'AA/A-1+' Ratings Affirmed; Outlook Stable, Sept. 16, 2022

Rating score snapshot:

• Institutional assessment: 3
• Economic assessment: 1
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 4
• Monetary assessment: 2

Outlook: Stable

The stable outlook reflects our view that Belgium is a wealthy and productive economy with strong institutions even accounting for the risks to growth and the country's large government debt stemming from the fallout of the Russia-Ukraine conflict, as well as underlying budgetary pressures.

We also factor in our assumption that Belgium's federal structure will retain its current form, and that the federal government will continue to manage public finances. Furthermore, we assume that the government's economic and fiscal policy strategy will support Belgium's creditworthiness.

Downside scenario

We could lower the ratings if Belgium's budget deficit deviates significantly and negatively from our current expectations, or if nominal GDP growth is meaningfully lower, leading to an increase in the ratio of net general government debt-to-GDP. This could occur, for example, if the fallout of the Russia-Ukraine war and its impact on energy prices and economic growth in Europe are more protracted than we currently anticipate, or if the government's policy response does not address the underlying structural factors in the budget gap.

Upside scenario

We could raise the ratings if Belgium's budget deficit declines faster than we currently expect, for example due to a resolute implementation of budgetary consolidation leading to a clearly discernible declining trend in net government debt.

Table 5

Belgium
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	42.25	44.41	47.76	46.87	45.70	51.56	49.78	51.56	56.76	60.28
GDP growth	1.27	1.62	1.79	2.24	(5.36)	6.13	2.80	0.20	1.70	1.50
GDP per capita growth	0.74	1.13	1.31	1.75	(5.87)	5.87	2.24	(0.30)	1.19	1.00
Current account balance/GDP	0.55	0.70	(0.82)	0.16	0.84	(0.41)	(1.80)	(1.09)	(0.39)	(0.30)
Gross external financing needs/CAR&FXR	201.46	199.43	204.05	195.14	203.15	193.09	195.05	193.67	186.44	182.22
Narrow net external debt/CAR	84.10	85.67	75.21	85.31	102.72	80.31	82.45	79.97	72.30	67.19
GG balance/GDP	(2.36)	(0.68)	(0.87)	(1.94)	(8.97)	(5.56)	(6.00)	(4.60)	(3.75)	(3.30)
GG net debt/GDP	97.26	94.16	92.90	90.89	104.34	100.30	97.29	97.39	97.83	98.17
CPI inflation	1.77	2.22	2.32	1.25	0.43	3.22	10.60	6.50	3.00	2.10
Bank credit to resident private sector/GDP	90.01	90.92	93.01	93.64	97.56	94.10	88.97	88.15	88.47	89.13

Cyprus (BBB/Stable/A-3)

• Analyst: SOVIPF@spglobal.com
• Latest publication: Cyprus Upgraded To 'BBB/A-2' On Economic Resilience; Outlook Stable, Sept. 2, 2022

Rating score snapshot:

• Institutional assessment: 3
• Economic assessment: 3
• External assessment: 5
• Fiscal assessment – Flexibility and performance: 1
• Fiscal assessment – Debt burden: 4
• Monetary assessment: 4

Outlook: Stable

The stable outlook balances risks that effects from the war in Ukraine will significantly weaken the Cypriot economy against the economy's diversified structure and resilience to external shocks, alongside our expectation that the government's fiscal position will continue to improve.

Upside scenario

We could raise the sovereign ratings on Cyprus following improved stability in the financial system, as seen by further declines in nonperforming exposure (NPEs) on the banking sector's balance sheet, which could reduce the sector's contingent liability to the government, strengthen the effectiveness of monetary policy transmission, and improve banks' access to debt capital markets.

Downside scenario

Ratings downside could emerge if the war's effects resulted in materially weaker economic growth prospects or fiscal consolidation were to slow substantially compared with our forecasts, threatening the pace of government debt reduction.

Table 6

Cyprus
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	24.81	26.84	29.62	29.62	28.16	31.70	30.71	31.62	35.39	38.19
GDP growth	6.57	5.73	5.65	5.53	(4.37)	6.64	6.00	1.70	3.20	2.75
GDP per capita growth	6.41	4.93	4.49	4.12	(5.68)	5.69	5.05	0.79	2.28	1.83
Current account balance/GDP	(0.55)	(1.42)	(3.06)	(6.05)	(9.44)	(8.10)	(6.56)	(4.89)	(3.85)	(3.11)
Gross external financing needs/CAR&FXR	418.65	313.87	317.76	277.28	250.53	234.66	242.44	234.21	214.46	199.95
Narrow net external debt/CAR	209.95	206.07	145.90	126.85	144.10	123.96	137.49	127.50	108.15	93.52
GG balance/GDP	0.26	1.89	(3.62)	1.27	(5.77)	(1.70)	(0.90)	(0.40)	0.60	1.20
GG net debt/GDP	91.63	85.91	91.57	81.63	92.40	84.83	77.48	74.37	69.70	64.98
CPI inflation	(1.43)	0.54	1.43	0.25	(0.64)	2.45	7.50	3.50	2.00	2.00
Bank credit to resident private sector/GDP	215.88	191.00	135.75	107.42	108.55	93.21	81.62	78.70	75.14	72.06

Czechia (AA-/Stable/A-1+)

• Analyst: gabriel.forss@spglobal.com
• Latest publication: Czechia 'AA-/A-1+' Foreign Currency And 'AA/A-1+' Local Currency Ratings Affirmed; Outlook Stable, Oct. 14, 2022

Rating score snapshot:

• Institutional assessment: 2
• Economic assessment: 3
• External assessment: 1
• Fiscal assessment – Flexibility and performance: 4
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 2

Outlook: Stable

The stable outlook reflects our view that the buffers provided by Czechia's solid government and external balance sheets, including still sizable foreign currency reserves, are able to mitigate the adverse macroeconomic impact stemming from the Russia-Ukraine conflict.

Downside scenario

The ratings could come under pressure if:

• The negative impact of the conflict in Ukraine proves more severe than we currently expect, hurting economic output while causing budget deficits and government debt to soar above our current expectations.
• The supply of energy to Czechia becomes meaningfully constrained, preventing the country from sustaining industrial production and leading to a much weaker medium-term growth outlook.
• The Czech National Bank (CNB) overextends its currency market interventions, materially reducing its foreign currency reserves and prompting concerns about the credibility of the monetary regime and the effectiveness of its execution.

Upside scenario

We could raise the ratings if, once the effects of the conflict subside, Czechia's income levels improve to those of similarly rated sovereigns globally.

Table 7

Czech Republic
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	18.60	20.67	23.47	23.71	23.00	26.33	27.49	28.76	32.17	34.31
GDP growth	2.54	5.17	3.22	3.03	(5.50)	3.54	2.50	(0.25)	2.75	2.25
GDP per capita growth	2.39	4.92	2.92	2.65	(5.89)	3.47	2.24	(0.50)	2.49	2.00
Current account balance/GDP	1.76	1.35	0.51	0.36	2.02	(0.81)	(3.64)	(3.94)	(3.06)	(2.29)
Gross external financing needs/CAR&FXR	94.25	90.66	89.93	91.32	86.05	86.18	96.83	98.94	98.19	95.37
Narrow net external debt/CAR	(6.10)	(8.68)	(7.35)	(13.23)	(21.70)	(6.39)	4.46	2.32	(0.08)	(2.04)
GG balance/GDP	0.71	1.50	0.89	0.29	(5.77)	(5.10)	(4.60)	(4.40)	(3.50)	(2.50)
GG net debt/GDP	27.85	23.72	21.68	19.79	24.95	27.84	29.29	31.72	33.18	34.24
CPI inflation	0.70	2.38	1.94	2.57	3.34	3.32	15.00	9.00	4.00	2.00
Bank credit to resident private sector/GDP	55.00	54.73	55.22	54.14	56.90	57.91	53.42	52.31	51.40	51.62

Denmark (AAA/Stable/A-1+)

• Analyst: johanna.melinder@spglobal.com
• Latest publication: Denmark 'AAA/A-1+' Ratings Affirmed; Outlook Stable, Aug. 26, 2022

Rating score snapshot:

• Institutional assessment: 1
• Economic assessment: 1
• External assessment: 3
• Fiscal assessment – Flexibility and performance: 2
• Fiscal assessment – Debt burden: 1
• Monetary assessment: 3

Outlook: Stable

The stable outlook reflects our expectation that Denmark can withstand a temporary economic shock without lasting and structural damage to its credit metrics.

Downside scenario

We could lower the ratings if Denmark's budgetary position significantly weakens; for example, if the adverse economic impact from the Russia-Ukraine conflict and rising inflation have a more substantial effect on Denmark's economic activity, and therefore on its budgetary performance, than we currently expect.

Table 8

Denmark
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	54.86	57.77	61.72	59.68	61.01	68.20	66.67	69.81	77.08	82.51
GDP growth	3.25	2.82	1.99	1.49	(1.99)	4.86	2.80	(0.20)	1.50	2.00
GDP per capita growth	2.39	2.08	1.42	1.06	(2.28)	4.55	2.29	(0.40)	1.30	1.80
Current account balance/GDP	7.76	8.05	7.22	8.82	8.15	8.15	8.51	8.26	7.86	7.63
Gross external financing needs/CAR&FXR	191.12	191.58	196.21	185.18	190.61	188.55	174.85	164.79	164.13	163.56
Narrow net external debt/CAR	50.46	47.23	44.73	37.66	47.65	34.15	35.92	31.67	32.20	32.92
GG balance/GDP	(0.11)	1.79	0.76	4.13	0.21	3.63	0.50	0.20	0.20	0.40
GG net debt/GDP	21.39	18.76	15.85	12.79	12.40	11.05	10.22	10.26	10.50	10.52
CPI inflation	0.00	1.10	0.69	0.69	0.39	1.94	8.40	6.00	2.30	1.80
Bank credit to resident private sector/GDP	168.09	164.33	163.35	163.17	165.99	157.25	142.65	136.20	134.05	131.81

Estonia (AA-/Negative /A-1+)

• Analyst: johanna.melinder@spglobal.com
• Latest publication: Estonia Outlook Revised To Negative From Stable On Spillover Risks From The War; 'AA-/A-1+' Ratings Affirmed, Dec. 6, 2022

Rating score snapshot:

• Institutional assessment: 2
• Economic assessment: 3
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 2
• Fiscal assessment – Debt burden: 1
• Monetary assessment: 3

Outlook: Negative

The negative outlook reflects our view that a more protracted and less predictable conflict between Russia and Ukraine could impose higher economic costs on Estonia's small, open economy than previously thought, leading to worsening fiscal, external, and monetary metrics.

Downside scenario

We could lower the ratings if the conflict's negative effects on Estonia are more significant than we expect, or if it escalates, weighing on Estonia's public finances, growth, and competitiveness.

Upside scenario

We could revise the outlook to stable if the rising risks from the conflict subside without long-term implications for Estonia's economy or competitiveness.

Table 9

Estonia
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	18.30	20.41	23.12	23.39	23.59	27.92	26.79	28.69	32.83	35.45
GDP growth	3.16	5.79	3.78	3.74	(0.55)	8.01	0.40	0.00	2.60	3.00
GDP per capita growth	3.18	5.51	3.34	3.42	(0.64)	7.87	(1.08)	0.30	2.50	2.90
Current account balance/GDP	1.23	2.26	0.88	2.37	(0.99)	(1.81)	(1.38)	(1.19)	(1.10)	(0.91)
Gross external financing needs/CAR&FXR	157.47	148.95	149.38	139.87	143.09	137.63	133.15	130.82	127.89	126.13
Narrow net external debt/CAR	26.76	26.36	19.51	16.93	13.92	8.03	8.49	8.49	8.29	7.52
GG balance/GDP	(0.41)	(0.47)	(0.55)	0.12	(5.47)	(2.41)	(2.10)	(2.70)	(1.80)	(1.00)
GG net debt/GDP	(3.32)	(2.31)	(2.57)	(2.72)	3.44	5.39	6.65	9.04	10.38	10.86
CPI inflation	0.80	3.65	3.42	2.27	(0.63)	4.48	19.50	8.80	4.00	3.00
Bank credit to resident private sector/GDP	70.29	64.60	62.44	60.84	63.97	60.21	57.19	55.39	54.46	53.85

Finland (AA+/Stable/A-1+)

• Analyst : niklas.steinert@spglobal.com
• Latest publication: (Full Analysis) Finland, Oct. 31, 2022

Rating score snapshot:

• Institutional assessment: 2
• Economic assessment: 1
• External assessment: 4
• Fiscal assessment – Flexibility and performance: 2
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 2

Outlook: Stable

The stable outlook reflects S&P Global Ratings' expectation that Finland's economy will continue to absorb the negative economic, external, and fiscal effects of the Russia-Ukraine conflict without a permanent deterioration of the country's credit metrics. The outlook also reflects our expectation that there is limited impact from Finland's efforts to decouple the economy from Russian energy supplies.

Downside scenario

We could consider a negative rating action in the next two years if Finland's economy took a harder hit from the conflict in Ukraine, leading to a pronounced and protracted deterioration in the country's fiscal position.

Upside scenario

We could raise the long-term ratings should the economic fallout from the conflict prove to be contained and structural reform efforts strengthened economic growth prospects. Structurally stronger fiscal and external performance could also create ratings upside.

(Latest research update published on July 1, 2022)

Table 10

Finland
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	43.88	46.45	50.01	48.66	49.21	53.72	51.23	52.76	58.37	62.29
GDP growth	2.81	3.19	1.14	1.22	(2.21)	2.97	2.00	0.00	1.25	1.25
GDP per capita growth	2.52	2.89	0.96	1.14	(2.34)	2.82	1.85	(0.15)	1.10	1.10
Current account balance/GDP	(2.00)	(0.80)	(1.85)	(0.31)	0.69	0.64	(2.68)	(1.20)	(0.68)	(0.63)
Gross external financing needs/CAR&FXR	393.44	339.39	288.92	349.55	362.19	348.04	342.90	331.52	317.33	309.73
Narrow net external debt/CAR	224.11	248.78	219.98	196.11	258.37	218.49	213.63	217.01	212.13	209.54
GG balance/GDP	(1.70)	(0.65)	(0.85)	(0.95)	(5.53)	(2.69)	(1.50)	(1.90)	(2.10)	(2.10)
GG net debt/GDP	29.53	26.78	26.00	26.49	32.94	28.90	33.70	36.31	37.58	38.46
CPI inflation	0.39	0.84	1.18	1.13	0.39	2.06	7.10	4.25	2.00	1.80
Bank credit to resident private sector/GDP	94.91	93.73	95.04	96.65	101.54	100.12	96.49	96.49	95.76	95.41

France (AA/Negative/A-1+)

• Analyst: remy.carasse@spglobal.com
• Latest publication: France Outlook Revised To Negative On Rising Budgetary Risks; 'AA/A-1+' Ratings Affirmed, Dec. 2, 2022

Rating score snapshot:

• Institutional assessment: 2
• Economic assessment: 1
• External assessment: 4
• Fiscal assessment – Flexibility and performance: 4
• Fiscal assessment – Debt burden: 5
• Monetary assessment: 2

Outlook: Negative

The negative outlook reflects our view of rising risks to France's public finances and the resulting reduction in fiscal space. This comes amid France's already large general government debt, implementation risk associated with its structural reform agenda, a wider economic slowdown, and the European Central Bank's (ECB's) monetary tightening.

Downside scenario

We could lower the sovereign ratings on France if general government debt to GDP does not decline over 2023-2025. Several factors could affect the budgetary position, including:

• A lack of structural reforms aimed at supporting productivity gains and easing the burden on public spending;
• General government interest payments increasing above 5% of general government revenue;
• A prolonged slowdown in economic performance, especially if it damages long-term productivity.

Upside scenario

We could revise the outlook to stable if France's budget deficits are materially lower than we expect, resulting in declining general government debt to GDP over 2023-2025. This could be underpinned by:

• The implementation of structural reforms that support productivity gains and lessen the burden on public spending;
• Resolute budgetary consolidation, leading to better-than-projected fiscal outcomes;
• Stronger-than-expected economic growth.

Table 11

France
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	36.99	38.76	41.57	40.58	38.99	43.59	40.49	41.72	46.25	49.56
GDP growth	0.99	2.45	1.82	1.88	(7.90)	6.77	2.50	0.20	1.60	1.50
GDP per capita growth	0.73	2.12	1.59	1.67	(8.36)	6.55	2.30	(0.00)	1.40	1.30
Current account balance/GDP	(0.49)	(0.77)	(0.83)	0.51	(1.80)	0.36	(1.39)	(1.18)	(1.02)	(1.04)
Gross external financing needs/CAR&FXR	313.45	304.61	314.87	330.44	391.97	374.49	366.19	357.51	340.73	330.80
Narrow net external debt/CAR	262.36	291.91	234.19	251.67	359.94	275.99	282.43	279.05	263.27	255.25
GG balance/GDP	(3.64)	(2.96)	(2.29)	(3.06)	(8.99)	(6.54)	(5.00)	(5.40)	(4.90)	(4.50)
GG net debt/GDP	89.89	89.50	89.64	89.22	100.99	99.09	98.95	100.44	101.44	102.20
CPI inflation	0.31	1.16	2.10	1.30	0.52	2.07	5.90	4.40	2.40	2.30
Bank credit to resident private sector/GDP	97.19	99.71	102.26	104.32	119.16	115.08	115.11	113.88	112.75	111.84

Germany (AAA/Stable/A-1+)

• Analyst: niklas.steinert@spglobal.com
• Latest publication: Germany 'AAA/A-1+' Ratings Affirmed; Outlook Stable, Sept. 23, 2022

Rating score snapshot:

• Institutional assessment: 2
• Economic assessment: 1
• External assessment: 1
• Fiscal assessment – Flexibility and performance: 2
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 2

Outlook: Stable

The stable outlook reflects that Germany's external and fiscal buffers, resilient economy, and institutional effectiveness will allow the country to absorb the indirect impact of the Russia-Ukraine conflict, including the shock to energy prices, thereby preventing Germany's creditworthiness from deteriorating over the next two years. We also believe that the country's membership in the EU provides additional buffers to its export-driven economy. These include recent EU mechanisms to better immunize Europe's energy union against external price shocks.

Downside scenario

We could lower our ratings in case of much deeper and protracted economic scarring in Germany, most likely due to a permanent effect of the current energy crisis. This would likely coincide with Germany's fiscal position worsening materially beyond our projections, with low prospects for improvement, and debt or contingent liabilities increasing significantly, or other adverse and unexpected developments, such as the deterioration of the European Central Bank's (ECB's) monetary flexibility.

Table 12

Germany
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	42.22	44.73	48.01	46.84	46.77	51.23	49.21	52.01	57.93	61.76
GDP growth	2.23	2.68	0.98	1.06	(3.70)	2.63	1.80	(0.50)	1.00	1.30
GDP per capita growth	1.01	2.25	0.65	0.78	(3.87)	2.64	0.79	(0.70)	0.80	1.10
Current account balance/GDP	8.51	7.83	7.96	7.57	7.01	7.36	4.29	3.54	3.99	4.36
Gross external financing needs/CAR&FXR	199.91	197.54	201.23	204.25	212.23	217.54	230.31	222.15	210.78	203.16
Narrow net external debt/CAR	69.53	67.71	57.11	62.30	85.58	76.73	81.27	80.08	72.77	69.24
GG balance/GDP	1.16	1.34	1.95	1.53	(4.33)	(3.73)	(3.17)	(2.06)	(1.28)	(1.48)
GG net debt/GDP	63.81	58.74	55.86	53.97	60.05	60.57	58.06	56.31	55.15	54.86
CPI inflation	0.40	1.69	1.86	1.44	0.28	3.21	8.80	7.30	3.00	1.80
Bank credit to resident private sector/GDP	87.27	87.26	87.98	89.42	94.98	94.59	94.59	94.59	94.59	94.59

Table 13 - GreeceGreece (BB+/Stable/B)

• Analyst: adrienne.benassy@spglobal.com
• Latest publication: Greece 'BB+/B' Ratings Affirmed; Outlook Stable, Oct. 21, 2022

Rating score snapshot:

• Institutional assessment: 3
• Economic assessment: 3
• External assessment: 5
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 6
• Monetary assessment: 2

Outlook: Stable

The stable outlook reflects our expectation that Greece's fiscal buffers and proven policy effectiveness will enable the country to absorb the indirect impacts on its economy and public finances from the Russia-Ukraine war.

Downside scenario

We could lower the ratings on Greece if the economy weakens significantly more than we expect, or if budgetary performance deteriorates materially below our projections.

Upside scenario

We could raise our ratings on Greece if structural reforms continue, alongside stronger-than-expected economic and budgetary performance.

Table 13

Greece
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	17.91	18.56	19.74	19.14	17.63	20.12	20.07	20.75	23.19	25.14
GDP growth	(0.49)	1.09	1.67	1.88	(9.00)	8.43	5.70	1.40	2.50	2.80
GDP per capita growth	0.20	1.24	1.92	2.04	(8.95)	8.84	5.70	1.40	2.50	2.80
Current account balance/GDP	(1.75)	(1.93)	(2.91)	(1.49)	(6.63)	(6.75)	(7.10)	(7.93)	(7.76)	(6.80)
Gross external financing needs/CAR&FXR	367.81	307.46	265.96	245.56	339.94	344.35	353.24	350.62	327.43	309.95
Narrow net external debt/CAR	452.00	441.47	370.46	359.73	533.36	363.46	352.15	350.26	320.24	298.11
GG balance/GDP	0.18	0.57	0.93	1.15	(9.93)	(7.45)	(4.00)	(2.60)	(2.20)	(1.50)
GG net debt/GDP	172.19	171.20	165.89	160.95	188.46	177.00	157.76	153.95	149.30	143.89
CPI inflation	0.02	1.13	0.78	0.51	(1.26)	0.57	9.60	5.20	2.00	2.00
Bank credit to resident private sector/GDP	111.57	103.70	94.55	83.80	85.36	59.53	50.28	48.09	46.19	44.49

Guernsey (AA-/Negative/A-1+)

• Analyst: samuel.tilleray@spglobal.com
• Latest publication: (Full Analysis) Guernsey, July 18, 2022

Rating score snapshot:

• Institutional assessment: 2
• Economic assessment: 2
• External assessment: 4
• Fiscal assessment – Flexibility and performance: 1
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 5

Outlook: Negative

The negative outlook primarily reflects risks to Guernsey's large liquid asset position in the face of rising expenditure plans. The negative outlook also reflects uncertainties related to any offsetting new revenue-raising measures, such as the introduction of a GST.

Downside scenario

We could lower the ratings within the next 18 months if we forecasted government fiscal deficits to remain elevated, such that liquid assets fell consistently well below 100% of GDP. This could happen, for instance, if the government implemented its capex program more aggressively than we currently assume, or if losses at key state-owned enterprises were to widen further. We could also take a negative rating action if a significant shift in the global regulatory, tax, and competitive environment undermined Guernsey's financial services sector.

Upside scenario

We could revise the outlook to stable within the next 18 months if we saw reduced fiscal pressure on government assets. This could occur as a result of a meaningful cut to current spending, or through the implementation of tax-base-widening measures such as a GST. A significant improvement in economic activities could also help narrow the fiscal gap.

(Latest research update published on Jan. 14, 2022)

Table 14

Guernsey
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	63.99	64.31	67.70	65.93	63.31	74.26	68.18	75.80	81.74	85.16
GDP growth	3.01	3.22	(0.18)	0.18	(4.76)	5.64	1.00	0.20	1.80	0.90
GDP per capita growth	3.24	2.98	(0.84)	(0.48)	(5.36)	4.75	0.60	(0.10)	1.50	0.60
Current account balance/GDP	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Gross external financing needs/CAR&FXR	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Narrow net external debt/CAR	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
GG balance/GDP	1.61	1.12	(0.52)	(0.44)	(5.43)	(2.50)	(2.59)	(4.21)	(4.00)	(3.03)
GG net debt/GDP	(82.81)	(88.16)	(81.64)	(88.11)	(92.64)	(92.04)	(75.80)	(74.02)	(72.53)	(72.25)
CPI inflation	0.75	2.28	2.47	2.08	1.58	2.82	7.00	5.00	1.50	2.00
Bank credit to resident private sector/GDP	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A

Iceland (A/Stable/A-1)

• Analyst: niklas.steinert@spglobal.com
• Latest publication: (Full Analysis) Iceland, Nov. 14, 2022

Rating score snapshot:

• Institutional assessment: 2
• Economic assessment: 2
• External assessment: 3
• Fiscal assessment – Flexibility and performance: 4
• Fiscal assessment – Debt burden: 4
• Monetary assessment: 4

Outlook: Stable

The stable outlook indicates our expectation that Iceland's economy will post strong growth rates this year and remain relatively unaffected by the war in Ukraine. Rising inflation has prompted the Central Bank of Iceland (CBI) to tighten monetary policy and the sound economic backdrop will enable the government to reduce fiscal deficits over the next few years. At the same time, we expect ample foreign reserves will enable the CBI to deal with external pressures or exchange-rate volatility, should they occur.

Downside scenario

We could lower the ratings on Iceland if the effects of the war in Ukraine became more pronounced, for example through second-round effects stemming from lower economic activity in Iceland's main trading partners in Europe or a shift in global travel preferences. A drop in tourism could also occur if there is a surge in COVID-19 cases, particularly due to new, more dangerous coronavirus variants. In such a scenario, we believe it could be more difficult for Iceland's monetary and fiscal authorities to provide further policy support, given currently elevated inflation and previously large deficits. Net general government debt would rise materially beyond our expectations.

Upside scenario

We could raise the ratings if economic growth exceeded our expectations, which would likely coincide with stronger export growth and exports becoming more diverse, reducing external debt or the volatility in Iceland's terms of trade. This scenario could enable even quicker fiscal consolidation than we expect, putting the government's debt burden firmly on a downward path and close to prepandemic levels as a share of GDP.

(Latest research update published on May 14, 2022)

Table 15

Iceland
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	62.53	73.09	75.37	69.54	59.58	69.42	73.00	74.98	78.82	83.07
GDP growth	6.30	4.19	4.89	2.42	(6.84)	4.40	5.75	1.90	2.50	2.25
GDP per capita growth	5.21	2.40	1.85	(0.03)	(8.67)	3.08	3.65	0.39	0.99	0.74
Current account balance/GDP	8.10	4.22	4.11	6.52	1.86	(1.60)	(2.77)	(1.36)	(0.80)	(0.71)
Gross external financing needs/CAR&FXR	89.25	79.54	83.70	80.35	79.43	89.96	93.08	93.24	93.74	93.74
Narrow net external debt/CAR	54.81	51.25	41.24	38.66	64.97	58.21	53.24	56.86	55.04	53.63
GG balance/GDP	12.21	0.54	0.66	(1.82)	(8.50)	(8.70)	(4.80)	(3.14)	(2.23)	(1.92)
GG net debt/GDP	41.63	37.72	30.71	36.58	41.32	41.82	39.20	39.78	40.14	40.28
CPI inflation	1.70	1.76	2.68	3.02	2.84	4.44	8.25	6.25	3.40	2.50
Bank credit to resident private sector/GDP	127.72	129.66	131.29	127.76	138.59	116.02	106.47	102.41	100.89	100.11

Ireland (AA-/Positive/A-1+)

• Analyst: johanna.melinder@spglobal.com
• Latest publication: Ireland Outlook Revised To Positive On Fiscal And Macroeconomic Resilience; 'AA-/A-1+' Ratings Affirmed, Nov. 18, 2022

Rating score snapshot:

• Institutional assessment: 2
• Economic assessment: 1
• External assessment: 4
• Fiscal assessment – Flexibility and performance: 2
• Fiscal assessment – Debt burden: 3
• Monetary assessment: 2

Outlook: Positive

The positive outlook indicates our view that, even in the face of a global economic slowdown, Ireland's growth and fiscal outcomes may lead to a more rapid reduction in government debt then we currently project as Ireland returns quickly to operating primary budgetary surpluses above the euro area average.

Downside scenario

We could revise the outlook back to stable if Ireland's fiscal and economic performance does not improve as expected, or if structural bottlenecks are not addressed, ultimately dampening its economic growth potential.

Upside scenario

We could raise the ratings in the next 24 months if Ireland posts elevated primary budgetary surpluses, leading to a sustained reduction in government debt. More broadly, ongoing economic resilience, a diversification of economic sectors including indigenous ones, as well as a reduction in reliance on corporate tax receipts ahead of the planned rollout of a global minimum effective corporate tax rate, could lead us to consider an upgrade.

Table 16

Ireland
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	63.28	70.31	79.86	81.43	85.78	100.71	97.19	100.44	111.54	119.72
GDP growth	2.01	9.01	8.53	5.44	6.18	13.59	5.10	1.20	3.00	3.30
GDP per capita growth	0.96	7.68	7.49	3.85	4.90	12.64	4.06	0.20	1.98	2.28
Current account balance/GDP	(4.21)	0.49	4.90	(19.84)	(6.84)	14.23	5.38	6.95	7.03	7.08
Gross external financing needs/CAR&FXR	374.04	332.16	319.52	328.05	325.00	297.44	306.35	299.46	282.34	270.70
Narrow net external debt/CAR	227.91	214.77	195.83	191.23	189.87	167.78	174.08	169.62	156.81	148.34
GG balance/GDP	(0.76)	(0.28)	0.14	0.47	(5.03)	(1.66)	0.70	0.90	0.50	0.60
GG net debt/GDP	66.09	58.55	52.30	46.69	49.91	45.17	40.09	37.09	34.71	32.50
CPI inflation	(0.20)	0.30	0.70	0.89	(0.49)	2.37	8.40	7.00	2.80	1.80
Bank credit to resident private sector/GDP	68.98	61.03	54.85	48.75	44.77	37.89	34.85	33.24	31.78	30.45

Italy (BBB/Stable/A-2)

• Analyst: frank.gill@spglobal.com
• Latest publication: (Full Analysis) Italy, Oct. 24, 2022

Rating score snapshot:

• Institutional assessment: 3
• Economic assessment: 3
• External assessment: 3
• Fiscal assessment – Flexibility and performance: 4
• Fiscal assessment – Debt burden: 6
• Monetary assessment: 2

Outlook: Stable

The stable outlook reflects the risks to the Italian economy and public finances from a slowdown or reversal in the delivery of critical reforms, including those attached to planned disbursements of the RRF. The outlook also reflects the combination of high inflation and risks to Italy's energy supplies, which make it challenging to project the future performance of public finances and the economy, against the backdrop of monetary tightening. These are partly offset by Italy's wealthy diversified private sector, its membership in the EMU, and the strength of the economy's external balance sheet.

Downside scenario

The ratings could come under pressure if Italy's economy were to fall into a protracted multiyear recession, leading to worsening fiscal outcomes. A prolonged inflationary shock alongside weak growth would also pose a risk to Italy's public finances and, consequently, the ratings

Upside scenario

We could raise the ratings if the new government moves ahead with the delivery of reforms and continues the path of gradual budgetary consolidation to address the government's high indebtedness.

(Latest research update published on July 26, 2022)

Table 17

Italy
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	30.94	32.38	34.59	33.63	31.80	35.58	33.67	34.07	37.42	39.66
GDP growth	1.29	1.67	0.93	0.48	(9.04)	6.74	3.77	(0.12)	1.42	1.20
GDP per capita growth	1.51	1.80	1.10	1.60	(8.77)	7.47	3.98	0.08	1.62	1.40
Current account balance/GDP	2.61	2.59	2.61	3.31	3.86	3.05	0.32	0.91	0.80	0.93
Gross external financing needs/CAR&FXR	205.60	210.22	223.95	228.46	223.98	221.22	224.97	227.48	223.68	223.82
Narrow net external debt/CAR	239.59	255.26	218.35	224.36	287.57	223.30	247.60	249.01	235.46	227.59
GG balance/GDP	(2.40)	(2.42)	(2.17)	(1.51)	(9.49)	(7.23)	(5.60)	(5.10)	(4.40)	(3.60)
GG net debt/GDP	126.31	126.35	126.32	126.20	144.70	140.93	137.27	139.91	140.66	141.10
CPI inflation	(0.10)	1.40	1.18	0.68	(0.19)	1.94	8.47	6.10	2.25	2.00
Bank credit to resident private sector/GDP	102.96	98.06	93.63	91.79	99.87	92.81	88.45	88.60	88.02	87.76

Jersey (AA-/Stable/A-1+)

• Analyst: samuel.tilleray@spglobal.com
• Latest publication: (Full Analysis) Jersey, July 18, 2022

Rating score snapshot:

• Institutional assessment: 2
• Economic assessment: 2
• External assessment: 4
• Fiscal assessment – Flexibility and performance: 1
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 5

Outlook: Stable:

The stable outlook reflects balanced risks to Jersey's creditworthiness over our two-year outlook horizon.

Downside scenario

Rating pressure could build if Jersey's policymakers failed to adequately mitigate any economic fallout from external risks, particularly to the large financial services sector. These risks could pertain, for example, to changes in the global regulatory, tax, and competitive environment, or to shifts in the U.K.'s financial sector following its departure from the EU single market. Rating pressure could also materialize if we projected that the Jersey government's access to liquid assets, worth more than 100% of GDP, became restricted.

Upside scenario

We could raise the ratings if we saw a substantial improvement in the availability of external statistical data, such as full balance of payments and international investment position, potentially revealing lower external financing risks to Jersey's economy and public finances than we currently assume.

(Latest research update published on Jan. 14, 2022)

Table 18

Jersey
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	53.90	52.77	57.21	58.19	52.86	63.69	60.98	73.75	81.22	83.65
GDP growth	0.17	0.89	1.96	4.65	(10.10)	10.78	2.50	5.90	3.10	0.30
GDP per capita growth	(1.27)	(0.45)	0.91	3.58	(10.64)	9.36	1.38	4.80	2.03	(0.74)
Current account balance/GDP	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Gross external financing needs/CAR&FXR	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Narrow net external debt/CAR	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
GG balance/GDP	1.19	1.31	1.07	0.10	(4.53)	(1.17)	(5.25)	(3.31)	(2.38)	(2.71)
GG net debt/GDP	(124.26)	(131.63)	(118.02)	(121.12)	(139.68)	(128.44)	(101.30)	(90.80)	(87.80)	(87.87)
CPI inflation	1.71	3.04	3.96	2.89	1.26	2.75	9.10	9.70	3.10	1.70
Bank credit to resident private sector/GDP	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A

Latvia (A+/Negative /A-1)

• Analyst: gabriel.forss@spglobal.com
• Latest publication: (Full Analysis) Latvia, Dec. 19, 2022

Rating score snapshot:

• Institutional assessment: 3
• Economic assessment: 3
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 3

Outlook: Negative

The negative outlook reflects our view that a more protracted and less predictable conflict between Russia and Ukraine could impose higher economic and security costs on Latvia's small, open economy, leading to worsening fiscal, external, and monetary metrics.

Downside scenario

We could lower the ratings if the conflict's negative effects are more significant than we expect, or it escalates, weighing on Latvia's public finances, growth, and competitiveness.

Upside scenario

We could revise the outlook to stable if the rising risks from the conflict subside without long-term implications for the country's economy or competitiveness.

(Latest research update published on Dec. 6, 2022)

Table 19

Latvia
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	14.40	15.76	17.93	18.00	18.28	21.25	21.79	23.01	26.05	28.35
GDP growth	2.37	3.31	3.99	2.57	(2.20)	4.07	1.75	(0.50)	2.75	3.00
GDP per capita growth	3.36	4.15	4.77	3.23	(1.46)	5.04	1.95	(0.50)	2.96	3.21
Current account balance/GDP	1.62	1.27	(0.14)	(0.57)	2.60	(4.20)	(5.27)	(4.91)	(4.04)	(2.97)
Gross external financing needs/CAR&FXR	185.80	180.20	182.73	168.10	155.18	161.42	155.31	155.33	153.58	151.31
Narrow net external debt/CAR	52.16	56.69	48.80	46.33	44.06	34.09	36.85	42.05	39.64	38.55
GG balance/GDP	0.02	(0.77)	(0.84)	(0.57)	(4.34)	(6.98)	(6.00)	(4.00)	(2.25)	(1.50)
GG net debt/GDP	32.48	32.65	29.61	29.03	33.82	34.60	35.83	38.65	38.77	38.41
CPI inflation	0.10	2.90	2.55	2.75	0.08	3.24	17.50	9.50	3.75	2.50
Bank credit to resident private sector/GDP	40.06	35.64	30.72	28.78	28.25	23.56	20.51	19.46	18.57	17.94

Liechtenstein (AAA/Stable/A-1+)

• Analyst: michelle.keferstein@spglobal.com
• Latest publication: Liechtenstein 'AAA/A-1+' Ratings Affirmed; Outlook Stable, Nov. 25, 2022

Rating score snapshot:

• Institutional assessment: 1
• Economic assessment: 1
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 1
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 3

Outlook: Stable

The stable outlook reflects our view that, over the coming two years, Liechtenstein's strong budgetary position, extensive financial buffers, along with its high policy effectiveness and prudent regulatory framework will protect its creditworthiness from the economic fallout of the war in Ukraine.

Downside scenario

We could lower the rating over the coming two years if we observed a significant weakening of the principality's public finances. We could also lower the rating if we observed that an increased international tax or financial regulatory pressure on Liechtenstein, among other financial centers, severely constrained government revenues and hindered political strategy and effectiveness over a prolonged period.

Table 20

Liechtenstein
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	164.96	171.05	171.61	175.56	156.57	181.56	178.38	174.23	183.15	189.46
GDP growth	2.47	4.11	1.88	(2.30)	(9.45)	12.00	2.60	0.20	1.54	1.46
GDP per capita growth	1.96	3.28	1.18	(3.23)	(10.16)	11.26	1.57	(0.61)	1.03	0.80
Current account balance/GDP	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Gross external financing needs/CAR&FXR	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Narrow net external debt/CAR	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
GG balance/GDP	3.19	2.96	3.05	3.83	7.76	7.06	1.74	3.60	3.15	2.90
GG net debt/GDP	(90.30)	(93.51)	(89.83)	(102.17)	(125.39)	(118.54)	(100.39)	(103.14)	(105.55)	(108.46)
CPI inflation	(0.43)	0.53	0.94	0.36	(0.73)	0.58	2.90	2.40	1.50	1.00
Bank credit to resident private sector/GDP	368.04	198.60	208.41	215.68	244.93	219.36	210.25	207.43	206.25	206.32

Lithuania (A+/Negative /A-1)

• Analyst: johanna.melinder@spglobal.com
• Latest publication: Lithuania Outlook Revised To Negative from Stable On Spillover Effects From The War; 'A+/A-1' Ratings Affirmed, Dec. 2, 2022

Rating score snapshot:

• Institutional assessment: 3
• Economic assessment: 3
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 2
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 3

Outlook: Negative

The negative outlook reflects our view that a more protracted and less predictable conflict between Russia and Ukraine could impose higher economic and security costs on Lithuania's small, open economy, leading to worsening fiscal, external, and monetary metrics.

Downside scenario

We could lower the ratings if the conflict's impact were more significant than we expect, or it escalated, weighing on Lithuania's public finances, growth, and competitiveness.

Upside scenario

We could revise the outlook to stable if the rising risks from the conflict subsides without long-term implications for the economy or the country's competitiveness.

Table 21

Lithuania
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	14.90	16.77	19.14	19.60	20.35	23.77	23.79	25.99	29.85	32.88
GDP growth	2.52	4.28	3.99	4.63	(0.02)	5.98	2.30	0.50	2.60	3.00
GDP per capita growth	3.68	5.77	5.44	5.18	(0.02)	5.92	1.29	0.60	2.55	2.95
Current account balance/GDP	(1.07)	0.54	0.29	3.54	7.31	1.12	(4.17)	(2.54)	(1.11)	(0.24)
Gross external financing needs/CAR&FXR	140.29	138.73	135.24	126.90	111.55	118.16	130.31	125.97	123.48	122.08
Narrow net external debt/CAR	47.94	43.07	32.08	26.92	16.99	9.49	11.33	12.60	11.64	10.17
GG balance/GDP	0.25	0.42	0.54	0.47	(7.03)	(0.99)	(1.60)	(3.90)	(2.10)	(0.80)
GG net debt/GDP	35.92	32.86	30.09	29.06	37.25	33.37	30.73	31.82	31.67	30.50
CPI inflation	0.68	3.71	2.54	2.24	1.06	4.63	19.00	8.70	4.00	3.00
Bank credit to resident private sector/GDP	48.67	45.44	44.64	42.98	41.02	41.54	38.43	35.97	34.76	34.24

Luxembourg (AAA/Stable/A-1+)

• Analyst: adrienne.benassy@spglobal.com
• Latest publication: (Full Analysis) Luxembourg, Aug. 1, 2022

Rating score snapshot:

• Institutional assessment: 2
• Economic assessment: 1
• External assessment: 3
• Fiscal assessment – Flexibility and performance: 1
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 2

Outlook: Stable

The stable outlook points to our expectation that Luxembourg will maintain strong credit metrics over the next two years, overcoming the adverse economic and budgetary effects of the Russia-Ukraine conflict while effectively managing evolving international tax regulation.

Downside scenario

We could consider a negative rating action if the effects of the changing corporate taxation framework are more pronounced than we anticipate and weaken the country's economic growth prospects and budgetary performance. The rating could also come under pressure if credit growth surged to levels that jeopardized Luxembourg's economic and financial stability by, for example, sparking an unsustainable acceleration in asset valuations.

(Latest research update published on Sept. 11, 2020)

Table 22

Luxembourg
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	107.97	111.25	117.94	113.74	118.18	134.71	123.47	127.10	137.90	144.79
GDP growth	4.98	1.32	1.22	2.32	(0.80)	5.10	1.52	0.99	1.99	2.01
GDP per capita growth	2.56	(1.16)	(0.69)	0.34	(2.73)	3.67	(0.47)	(0.99)	(0.01)	0.01
Current account balance/GDP	4.77	4.74	3.74	3.43	4.57	4.67	2.30	3.51	5.21	5.53
Gross external financing needs/CAR&FXR	455.47	447.30	428.43	430.98	450.12	430.60	442.94	448.50	450.86	456.50
Narrow net external debt/CAR	302.14	316.14	259.49	273.23	220.05	196.77	211.91	220.10	230.98	239.87
GG balance/GDP	1.89	1.37	2.98	2.23	(3.43)	0.79	0.10	0.50	1.00	1.40
GG net debt/GDP	(16.65)	(16.98)	(16.02)	(18.28)	(14.89)	(12.40)	(11.30)	(10.68)	(10.80)	(11.33)
CPI inflation	0.04	2.11	2.02	1.65	0.00	3.47	8.30	4.00	2.50	2.00
Bank credit to resident private sector/GDP	92.40	97.53	102.40	105.76	106.89	100.88	99.98	99.15	100.44	101.81

Malta (A-/Stable/A-2)

• Analyst: adrienne.benassy@spglobal.com
• Latest publication: Malta 'A-/A-2' Ratings Affirmed; Outlook Stable, Sept. 9, 2022

Rating score snapshot:

• Institutional assessment: 3
• Economic assessment: 3
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 3

Outlook: Stable

The stable outlook balances our expectation that the Russia-Ukraine conflict will slow the reduction of budget and current account deficits, with resilient economic and budgetary prospects in the medium term supported by the EU recovery plan (partially financed by EU funds), the gradual recovery in tourism, and the government's track record of sound fiscal policy.

Downside scenario

We could lower the ratings if the conflict's adverse effects on the Maltese economy are more severe or prolonged than anticipated, with an associated deterioration of the government budget and current account balances deviating significantly and negatively from our projections. A reversal of the government's efforts to further enhance governance and anti-money-laundering frameworks and implementation could also trigger a negative rating action.

Upside scenario

We would raise the ratings if Malta's budget and current account balances meaningly improve, or the economy further diversifies substantially to reduce vulnerability to external shocks.

Table 23

Malta
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	25.90	29.31	32.16	31.86	29.02	33.64	32.81	33.75	37.22	39.64
GDP growth	3.38	10.93	6.17	5.92	(8.32)	10.30	6.50	2.00	2.50	2.50
GDP per capita growth	0.92	8.54	2.73	2.09	(12.07)	9.97	5.45	0.99	1.49	1.49
Current account balance/GDP	(0.57)	5.86	5.66	4.97	(2.86)	(4.62)	(3.15)	(2.70)	(1.83)	(0.41)
Gross external financing needs/CAR&FXR	274.07	235.38	246.46	220.67	214.75	209.21	203.93	199.50	191.62	185.88
Narrow net external debt/CAR	58.81	50.56	44.49	43.86	53.29	49.14	44.00	40.97	37.82	35.69
GG balance/GDP	1.11	3.29	2.07	0.59	(9.37)	(7.78)	(5.90)	(4.90)	(3.20)	(2.70)
GG net debt/GDP	43.93	36.88	34.22	29.91	43.08	45.63	46.78	49.56	49.69	49.47
CPI inflation	0.90	1.27	1.73	1.53	0.79	0.71	6.20	4.50	2.60	2.00
Bank credit to resident private sector/GDP	80.10	73.20	71.96	71.21	81.60	76.92	72.70	72.53	72.64	72.96

Netherlands (AAA/Stable/A-1+)

• Analyst: remy.carasse@spglobal.com
• Latest publication: (Full Analysis) Netherlands, Oct. 24, 2022

Rating score snapshot:

• Institutional assessment: 2
• Economic assessment: 1
• External assessment: 3
• Fiscal assessment – Flexibility and performance: 2
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 2

Outlook: Stable

The stable outlook reflects our expectation that the Netherlands will contain the adverse effect of soaring global energy prices on its economy and budgetary position, and that there will be no lasting structural damage to its credit metrics.

Downside scenario

The ratings could come under pressure if budgetary outcomes deviate significantly and negatively from our forecasts or a protracted slowdown in economic performance damaged long-term productive capacity.

(Latest research update published on May 15, 2020)

Table 24

Netherlands
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	46.18	48.82	53.20	52.67	52.26	57.96	55.84	57.42	63.03	67.13
GDP growth	2.19	2.91	2.36	1.96	(3.89)	4.86	4.40	0.10	1.70	1.60
GDP per capita growth	1.72	2.29	1.77	1.36	(4.58)	4.46	3.98	(0.30)	1.29	1.20
Current account balance/GDP	7.11	8.92	9.32	6.92	5.14	7.18	5.02	4.33	4.31	4.33
Gross external financing needs/CAR&FXR	276.05	260.78	244.67	247.85	269.04	254.28	244.55	239.82	230.90	225.63
Narrow net external debt/CAR	210.57	201.47	167.80	184.01	221.62	162.69	165.79	160.35	149.93	144.14
GG balance/GDP	0.13	1.37	1.50	1.80	(3.71)	(2.61)	(1.00)	(2.50)	(0.90)	(0.60)
GG net debt/GDP	56.37	51.41	46.94	43.43	48.43	47.26	44.11	44.87	44.37	43.50
CPI inflation	0.11	1.29	1.60	2.68	1.11	2.83	11.50	5.60	1.80	2.10
Bank credit to resident private sector/GDP	114.22	110.89	105.20	100.34	102.50	97.41	90.20	87.08	84.78	82.79

Norway (AAA/Stable/A-1+)

• Analyst: johanna.melinder@spglobal.com
• Latest publication: (Full Analysis) Norway, Sept. 12, 2022

Rating score snapshot:

• Institutional assessment: 1
• Economic assessment: 1
• External assessment: 1
• Fiscal assessment – Flexibility and performance: 1
• Fiscal assessment – Debt burden: 1
• Monetary assessment: 1

Outlook: Stable

The stable outlook reflects S&P Global Ratings' view that Norway has ample financial buffers and headroom to withstand a temporary economic shock without a significant impact on its credit metrics. Norway has extremely strong fiscal and external net asset positions, which together with high wealth, strong institutions, and an effective monetary policy regime support the ratings.

Downside scenario

Our 'AAA' rating on Norway could come under pressure if the country's robust external and fiscal balance sheets eroded rapidly, combined with significantly weaker institutions and governance standards; or if geopolitical risk rises markedly, leading to external security risk. We consider this unlikely, however.

(Latest research update published on March 12, 2021)

Table 25

Norway
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	70.78	75.76	82.52	76.00	67.48	89.43	99.62	92.54	96.39	93.96
GDP growth	1.07	2.32	1.12	0.75	(0.72)	3.88	2.80	1.20	1.50	1.70
GDP per capita growth	0.21	1.40	0.41	0.13	(1.45)	3.42	2.09	0.50	0.79	0.99
Current account balance/GDP	4.45	5.48	7.95	2.90	1.11	14.96	24.62	20.38	17.95	11.12
Gross external financing needs/CAR&FXR	186.16	180.04	173.24	188.62	208.08	159.68	131.90	139.67	140.87	154.25
Narrow net external debt/CAR	(329.94)	(368.52)	(282.37)	(408.83)	(595.93)	(426.92)	(301.45)	(346.14)	(363.20)	(429.10)
GG balance/GDP	4.06	5.00	7.86	6.58	(2.61)	9.90	18.50	13.00	8.00	5.00
GG net debt/GDP	(206.47)	(220.76)	(196.50)	(245.62)	(282.02)	(264.06)	(234.49)	(240.20)	(241.35)	(258.99)
CPI inflation	3.60	1.83	2.75	2.21	1.26	3.48	5.60	4.00	2.50	2.20
Bank credit to resident private sector/GDP	150.89	151.09	146.73	153.54	167.79	144.81	121.86	129.46	134.36	149.26

Portugal (BBB+/Stable/A-2)

• Analyst: adrienne.benassy@spglobal.com
• Latest publication: Portugal Upgraded To 'BBB+' On Solid Fiscal And Growth Outcomes, Anchored By EU Inflows; Outlook Stable, Sept. 9, 2022

Rating score snapshot:

• Institutional assessment: 3
• Economic assessment: 3
• External assessment: 5
• Fiscal assessment – Flexibility and performance: 1
• Fiscal assessment – Debt burden: 5
• Monetary assessment: 2

Outlook: Stable

The stable outlook reflects our view that Portugal's growth prospects are resilient, despite risks stemming from the fallout of the Russia-Ukraine conflict, and that general government debt will remain on a strong downward trajectory.

Downside scenario

A potential worsening of Portugal's growth and government debt reduction trajectories could lead to a negative rating action. We believe this could occur, for instance, if global economic prospects deteriorated significantly beyond our expectations, through a combination of higher inflation and lower growth.

Upside scenario

We could raise the sovereign rating on Portugal on the back of strong growth or a strengthening of the external position with a reduced need for short-term external funding.

Table 26

Portugal
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	19.96	21.47	23.55	23.35	22.25	24.63	24.31	25.15	28.45	30.36
GDP growth	2.02	3.51	2.85	2.68	(8.30)	5.48	6.30	1.00	2.60	2.30
GDP per capita growth	2.35	3.83	3.03	2.83	(8.47)	5.46	6.51	1.20	2.81	2.51
Current account balance/GDP	1.17	1.29	0.55	0.44	(1.04)	(1.17)	(1.12)	(1.10)	(0.40)	(0.21)
Gross external financing needs/CAR&FXR	231.37	215.36	225.01	232.23	248.70	231.32	216.79	214.27	204.03	199.38
Narrow net external debt/CAR	241.78	251.20	212.28	211.64	267.11	184.09	187.16	181.23	164.68	157.60
GG balance/GDP	(1.94)	(2.96)	(0.35)	0.12	(5.82)	(2.90)	(1.70)	(0.70)	(0.10)	0.00
GG net debt/GDP	118.35	113.38	112.12	108.57	122.02	117.04	106.36	102.64	98.08	94.18
CPI inflation	0.64	1.55	1.17	0.30	(0.13)	0.94	7.60	4.20	2.30	2.00
Bank credit to resident private sector/GDP	134.92	124.57	118.07	109.62	119.86	113.57	103.59	101.28	98.61	96.59

Slovakia (A+/Negative/A-1)

• Analyst: johanna.melinder@spglobal.com
• Latest publication: Slovakia 'A+/A-1' Ratings Affirmed; Outlook Remains Negative, Nov. 18, 2022

Rating score snapshot:

• Institutional assessment: 3
• Economic assessment: 3
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 4
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 2

Outlook: Negative

The negative outlook reflects risks to Slovakia's economic growth and fiscal positions related to the Russia-Ukraine conflict. The direct and indirect effects of the conflict have increased public expenditure pressure. Although we note Slovakia's relative success in contracting alternative sources, we believe its high dependence on Russian oil and gas exposes it to energy supply risks under an EU-wide embargo on Russian hydrocarbons. At the same time, its concentrated, auto-heavy, and export-oriented industry structure make the economy more vulnerable to supply chain disruptions and slowdowns in global demand.

Downside scenario

We could lower our ratings on Slovakia in the next 18 months if ongoing energy supply pressures or a lack of structural reforms lead to lower growth rates for longer than expected, inflation out of sync with the rest of the eurozone, or higher public expenditure, triggering an increase in net general government debt. Ratings pressure could also build if supply chain disruptions do not ease, affecting medium-term prospects for Slovakia's manufacturing sector.

Upside scenario

We could revise the outlook to stable if the economic and fiscal consequences of the war and potential transition from Russian hydrocarbons prove manageable without longer-term implications for the economy.

Table 27

Slovakia
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	16.58	17.60	19.50	19.40	19.55	21.34	19.91	21.77	24.45	26.81
GDP growth	1.94	2.94	4.03	2.52	(3.37)	3.01	1.50	0.40	2.00	3.10
GDP per capita growth	1.85	2.77	3.88	2.38	(3.51)	2.98	0.50	0.50	1.85	2.95
Current account balance/GDP	(2.73)	(1.91)	(2.20)	(3.35)	0.35	(1.94)	(4.65)	(4.45)	(3.77)	(2.55)
Gross external financing needs/CAR&FXR	133.51	133.38	149.82	157.89	155.10	155.73	174.58	168.28	163.05	159.22
Narrow net external debt/CAR	39.98	45.11	41.69	43.99	56.39	47.95	50.96	49.03	47.21	44.78
GG balance/GDP	(2.57)	(0.98)	(1.01)	(1.29)	(5.39)	(6.06)	(4.00)	(4.80)	(4.00)	(3.50)
GG net debt/GDP	46.57	45.06	42.64	42.51	48.79	50.29	51.10	51.19	52.59	53.02
CPI inflation	(0.48)	1.39	2.54	2.77	2.01	2.82	12.20	13.50	4.00	3.50
Bank credit to resident private sector/GDP	57.18	60.29	62.35	63.23	67.13	68.22	68.04	64.87	64.03	63.31

Slovenia (AA-/Stable/A-1+)

• Analyst: gabriel.forss@spglobal.com
• Latest publication: (Full Analysis) Slovenia, Dec. 12, 2022

Rating score snapshot:

• Institutional assessment: 3
• Economic assessment: 3
• External assessment: 1
• Fiscal assessment – Flexibility and performance: 3
• Fiscal assessment – Debt burden: 2
• Monetary assessment: 2

Outlook: Stable

The stable outlook reflects our expectation that the country's economy and public finances will remain resilient to the inflationary headwinds and growth fallout from the Russia-Ukraine war, with significant fiscal and external buffers.

Downside scenario

We could lower our rating on Slovenia in the next two years if we observe significantly weaker fiscal positions and structurally weaker economic growth than we project. The aging population also represents a long-term risk to growth and public finances.

Upside scenario

We could raise the long-term rating on Slovenia if its economy navigates the heightened uncertainty from the external environment and high inflation, with economic activity expanding on a sustainable long-term trajectory, boosting its GDP per capita while preserving its strong external position.

(Latest research update published on June 10, 2022)

Table 28

Slovenia
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	21.69	23.52	26.21	26.11	25.63	29.28	28.73	30.00	33.61	36.12
GDP growth	3.19	4.82	4.45	3.45	(4.32)	8.21	4.75	0.75	2.50	3.00
GDP per capita growth	3.13	4.73	4.40	2.75	(5.00)	7.54	3.92	0.05	1.89	2.39
Current account balance/GDP	4.78	6.22	5.95	5.94	7.55	3.80	(0.14)	0.24	0.25	0.32
Gross external financing needs/CAR&FXR	131.77	126.39	127.48	125.24	132.96	138.78	140.54	138.63	135.26	133.66
Narrow net external debt/CAR	67.82	62.66	46.04	47.66	58.29	40.57	39.56	39.63	36.52	34.94
GG balance/GDP	(1.92)	(0.05)	0.74	0.57	(7.72)	(4.67)	(3.50)	(4.50)	(3.25)	(2.75)
GG net debt/GDP	61.52	58.88	52.25	48.53	55.69	55.24	53.79	55.43	55.86	56.18
CPI inflation	(0.15)	1.55	1.93	1.69	(0.28)	2.05	9.00	6.00	3.20	2.50
Bank credit to resident private sector/GDP	51.73	50.14	47.96	47.14	48.17	45.61	42.32	41.51	40.89	40.68

Spain (A/Stable /A-1)

• Analyst: frank.gill@spglobal.com
• Latest publication: (Full Analysis) Spain, Sept. 19, 2022

Rating score snapshot:

• Institutional assessment: 3
• Economic assessment: 2
• External assessment: 4
• Fiscal assessment – Flexibility and performance: 4
• Fiscal assessment – Debt burden: 5
• Monetary assessment: 2

Outlook: Stable

The outlook is stable for several reasons. We anticipate that the government will pursue policies supporting growth and a degree of fiscal consolidation over the next four years, while the economy benefits from incoming EU grants and loans equivalent to over 2% of GDP annually in inflows until 2027. Despite oncoming stress on demand, long-term economic growth prospects are sound, and the country's external accounts remain in (modest) surplus, as rapidly recovering tourism earnings largely offset the effects on the merchandise trade deficit from higher energy costs. While net imports account for over two-thirds of Spain's gross available energy (versus the euro area average of 62%), only 8% of these imports come from Russia (compared with the euro area average of 24%). This limited direct exposure does not shield Spain's economy or its balance of payments from the consequences of higher oil and gas prices. But it does give authorities added flexibility to resist calls for quotas on energy consumption this winter.

Downside scenario

Should the global economy worsen significantly beyond our expectations through higher inflation and lower growth, the effects on Spain's public finances might no longer be reconcilable with our 'A' rating, given other credit vulnerabilities, including the country's large-but-narrowing net external liability position and substantial private debt levels.

Upside scenario

Should Spain's economy recover further over the next three years, leading to a further decline in structural unemployment and a significant improvement in public finances, we could raise the rating. Additional government expenditure reforms to support the sustainability of the pension system, which operates sizable deficits including those from indexation, would also benefit the ratings. Alternatively, rating upside could arise from strengthening of the country's institutions or external position, including the reduced need for short-term external funding.

(Latest research update published on March 18, 2022)

Table 29

Spain
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	26.56	28.23	30.47	29.71	26.98	30.11	28.46	28.86	31.84	34.18
GDP growth	3.04	2.98	2.28	1.98	(11.33)	5.52	4.60	0.90	1.90	2.50
GDP per capita growth	3.06	2.78	2.00	1.38	(12.07)	5.37	4.29	0.60	1.60	2.19
Current account balance/GDP	3.17	2.77	1.88	2.11	0.61	0.95	1.86	1.60	1.14	1.17
Gross external financing needs/CAR&FXR	225.09	209.35	218.55	214.30	240.72	228.50	211.18	202.20	195.41	187.76
Narrow net external debt/CAR	241.37	259.68	224.75	229.63	322.67	232.54	229.40	219.50	198.02	178.19
GG balance/GDP	(4.30)	(3.12)	(2.59)	(3.06)	(10.13)	(6.87)	(4.40)	(4.00)	(3.60)	(3.50)
GG net debt/GDP	92.42	90.66	88.93	87.51	107.33	103.46	100.41	101.60	101.34	100.51
CPI inflation	(0.34)	2.04	1.74	0.77	(0.34)	3.01	9.00	5.10	2.30	1.50
Bank credit to resident private sector/GDP	112.07	105.24	97.63	92.99	107.01	98.90	93.91	93.39	91.92	90.03

Sweden (AAA/Stable/A-1+)

• Analyst: johanna.melinder@spglobal.com
• Latest publication: Sweden 'AAA/A-1+' Ratings Affirmed; Outlook Stable, Oct. 28, 2022

Rating score snapshot:

• Institutional assessment: 1
• Economic assessment: 1
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 1
• Fiscal assessment – Debt burden: 1
• Monetary assessment: 1

Outlook: Stable

The stable outlook reflects our view that Sweden has ample headroom to withstand a temporary economic shock. Considering its low government debt burden, the government can maintain a strong and sustainable fiscal position. Also, Sweden has a strong external balance sheet and effective institutions, supporting the 'AAA' rating.

Downside scenario

We could lower the rating if the economy performs much weaker than expected, leading to permanently lower economic activity and large, structural fiscal deficits that erode Sweden's strong fiscal position. We could also take a negative rating action if the government's policy responses were heavily impaired by fragmented politics, leading to significant economic inefficiencies or imbalances.

Table 30

Sweden
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	52.35	54.13	54.89	52.19	52.97	61.24	56.56	58.95	65.53	70.60
GDP growth	2.07	2.57	1.95	1.99	(2.17)	5.08	2.60	(0.80)	1.20	2.00
GDP per capita growth	1.00	1.09	0.69	0.89	(3.09)	4.55	1.58	(1.29)	0.60	1.39
Current account balance/GDP	2.39	2.95	2.71	5.50	5.89	5.35	4.20	4.06	4.38	4.50
Gross external financing needs/CAR&FXR	220.21	205.37	230.27	202.51	214.83	212.13	204.66	196.45	188.94	185.43
Narrow net external debt/CAR	121.07	124.65	120.35	133.08	166.01	122.43	121.79	119.34	114.66	112.39
GG balance/GDP	1.00	1.41	0.78	0.56	(2.77)	(0.09)	(0.40)	(0.90)	(0.50)	0.00
GG net debt/GDP	27.65	25.48	25.12	23.24	26.94	25.45	23.38	22.69	22.21	21.35
CPI inflation	1.14	1.86	2.04	1.72	0.65	2.66	8.40	7.50	3.00	1.90
Bank credit to resident private sector/GDP	132.02	134.93	133.76	134.78	140.75	137.67	127.26	121.50	119.94	120.01

Switzerland (AAA/Stable/A-1+)

• Analyst: amr.abdullah@spglobal.com
• Latest publication: (Full Analysis) Switzerland, Aug. 15, 2022

Rating score snapshot:

• Institutional assessment: 1
• Economic assessment: 1
• External assessment: 1
• Fiscal assessment – Flexibility and performance: 1
• Fiscal assessment – Debt burden: 1
• Monetary assessment: 2

Outlook: Stable

The stable outlook reflects S&P Global Ratings' view that, over the coming two years, Switzerland's strong external and fiscal buffers, competitive economy, and effective policymaking will protect the sovereign's creditworthiness from the fallout of the Russia-Ukraine conflict and adverse effects from the cessation of negotiations with the EU on an institutional framework agreement.

Downside scenario

We could lower the ratings on Switzerland in the next two years if the effectiveness and predictability of its policymaking unexpectedly deteriorated, potentially damaging the economy. A protracted and sizable drop in global demand for Swiss exports could also pressure the ratings.

(Latest research update published on Aug. 21, 2020)

Table 31

Switzerland
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	81.70	81.94	84.92	83.83	85.33	91.62	90.21	88.74	93.25	96.84
GDP growth	2.07	1.36	2.86	1.14	(2.38)	4.22	2.20	0.50	1.40	1.60
GDP per capita growth	0.95	0.59	2.13	0.42	(3.10)	3.40	1.79	0.10	1.00	1.20
Current account balance/GDP	7.27	5.34	5.05	4.27	1.61	7.39	5.25	4.09	5.05	5.84
Gross external financing needs/CAR&FXR	137.70	132.71	124.03	122.10	120.15	113.99	116.05	113.61	111.47	109.24
Narrow net external debt/CAR	18.94	5.53	6.31	0.74	(2.88)	2.66	1.52	(1.37)	(5.32)	(8.71)
GG balance/GDP	0.24	1.13	1.29	1.34	(3.06)	(0.54)	(0.20)	0.20	0.40	0.50
GG net debt/GDP	18.51	18.15	16.47	14.97	18.75	17.98	17.24	16.67	15.91	15.08
CPI inflation	(0.43)	0.53	0.94	0.36	(0.73)	0.58	2.90	2.40	1.50	1.00
Bank credit to resident private sector/GDP	170.38	175.46	176.22	180.52	189.09	184.91	183.23	185.55	187.89	190.45

United Kingdom (AA/Negative/A-1+)

• Analyst: maxim.rybnikov@spglobal.com
• Latest publication: (Full Analysis) United Kingdom, Oct. 24, 2022

Rating score snapshot:

• Institutional assessment: 2
• Economic assessment: 1
• External assessment: 2
• Fiscal assessment – Flexibility and performance: 5
• Fiscal assessment – Debt burden: 5
• Monetary assessment: 1

Outlook: Negative

The negative outlook primarily reflects what we view as rising risks to the U.K.'s fiscal position over the next two years.

Downside scenario

We could lower the ratings on the U.K. if its fiscal performance significantly weakened compared with our forecast, in turn reducing the government's fiscal policy headroom to react to economic shocks. This could be the case if the cost of government energy support to households turned out to be significantly higher and longer lasting than we currently forecast, while offsetting budgetary measures are not put in place. It could also be the case if government borrowing costs rose and remained at elevated levels for a sustained period in the context of higher debt levels or if revenue underperformed due to weaker economic growth. Ratings downside could also emerge if foreign financing for the U.K.'s large external deficit came under pressure, potentially weighing on the country's economic prospects.

Upside scenario

We could revise the outlook to stable if the U.K.'s fiscal performance strengthened, in turn reducing pressures on the net general government debt path. This could be underpinned by stronger-than-expected growth or additional medium-term fiscal consolidation measures enacted by the government.

(Latest research update published on Sept. 30, 2022)

Table 32

United Kingdom
	2016	2017	2018	2019	2020	2021	2022e	2023e	2024e	2025e
GDP per capita (in ‘000)	41.12	40.63	43.33	42.77	40.32	46.45	45.52	52.07	56.71	59.94
GDP growth	2.17	2.44	1.71	1.60	(11.03)	7.52	4.30	(1.00)	1.30	1.50
GDP per capita growth	1.33	1.84	1.10	1.05	(11.41)	6.99	3.78	(1.49)	0.80	1.00
Current account balance/GDP	(5.49)	(3.61)	(4.07)	(2.83)	(3.20)	(2.00)	(5.29)	(3.95)	(3.35)	(2.79)
Gross external financing needs/CAR&FXR	931.81	793.42	743.60	727.78	879.92	901.59	827.60	777.75	717.27	685.04
Narrow net external debt/CAR	234.47	252.62	220.76	255.99	349.10	305.40	301.63	277.78	263.88	253.57
GG balance/GDP	(3.33)	(2.37)	(2.18)	(2.22)	(12.79)	(8.03)	(5.50)	(5.80)	(4.50)	(2.70)
GG net debt/GDP	83.48	82.55	82.59	81.72	99.34	98.75	93.91	94.24	95.06	94.01
CPI inflation	0.70	2.68	2.42	1.79	0.83	2.67	9.40	7.00	0.90	1.60
Bank credit to resident private sector/GDP	132.05	134.56	133.75	132.34	146.38	138.71	128.03	123.24	121.03	118.81

Primary Credit Analyst:	Frank Gill, Madrid + 34 91 788 7213; frank.gill@spglobal.com
Secondary Contacts:	Adrienne Benassy, Paris +33 144206689; adrienne.benassy@spglobal.com
	Remy Carasse, Paris + 33 14 420 6741; remy.carasse@spglobal.com
	Marko Mrsnik, Madrid +34-91-389-6953; marko.mrsnik@spglobal.com
Additional Contact:	Sovereign and IPF EMEA; SOVIPF@spglobal.com