Dagong cuts Belgium's credit rating to negative
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Xinhua, September 5, 2011
Chinese credit agency Dagong Global Credit Rating Co. on Monday downgraded the credit rating outlook for Belgium from stable to negative while it maintained the country's local and foreign currency sovereign credit ratings at A+.
According to Dagong, the political crisis vexing Belgium does not support an improvement of its economic and financial momentum -- despite improving domestic and overseas demand.
The reduced solvency of Belgian central government led to the downgrade of its credit rating outlook, Dagong said.
The Chinese rating agency said even though the growth in private consumption and investment helped fuel the country's economic recovery, the country still faces uncertainty in the long term due to the defects in its economic structure, which is heavily reliant on foreign trade.
Dagong anticipated Belgium's economy to grow 2.2 percent in real terms in 2011.
In the medium term, Dagong said the developing European sovereign debt crisis and Belgium's heavy foreign trade dependence made the country's economy fragile.
The agency expects Belgium's fiscal revenue will increase due to economic growth and tax reform, and the government's spending will fall because of the country's austerity measures.
Dagong said the Belgian government's debt rate in 2010 and 2012 would reach 97.4 percent and 96.4 percent due to the increasing cost of caring for the aging population.
