Egan-Jones Downgrades Netherlands And Austria To A, Negative Watch

Tyler Durden's picture

Netherlands, that one of four remaining AAA-rated Eurozone countries (by the big 3 rating agencies at least), was just downgraded by Egan Jones. And for good measure, EJ also cut Austria, both to A, outlook negative.

Netherlands:

The Netherlands is among the European Union's top economies. However, the Netherlands has been shouldering the burdens of other EU countries and their banks via its exposure to the EFSF and indirectly via the ECB. The country's debt to GDP of 75% as of 2011 (expect near 82% for 2012) and a deficit to GDP of 4.7% is weak and is understated due to exposures to the EU periphery and the Netherland's financial institutions. On the positive side, unemployment was only 5.8% but will probably increase as many EU countries implement austerity measures. Other positives were the EUR48B balance of trade surplus and the EUR67B current account surplus as of the end of 2011. Inflation is near 2.5% currently (per the the Dutch Statistics Office) but is up from 0% in 2009 and will probably rise with monetization.

And Austria

Same story - like Germany and The Netherlands, Austria is among the European Union's top economy. However, Austria has been shouldering the burdens of other EU countries and their banks via its exposure to the EFSF and indirectly via the ECB. The country's debt to GDP of 79.4% as of 2011 (expect near 85% for 2012) and a deficit to GDP near 3.0%, are weak and are understated due to exposures to the EU periphery and the Netherland's financial institutions. Unemployment was near 8% and will probably increase as many EU countries implement austerity measures. Other positives were the EUR9.4B balance of trade  surplus and the EUR10.6B current account surplus as of the end of 2011. Inflation is near 2.1% currently (per Statistik Austria) but is up from 0% in 2009 and will probably rise with monetization