Fitch Affirms Norway at 'AAA'; Outlook Stable
Baku, June 22 (AZERTAC). Fitch Ratings has affirmed Norway's Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'AAA'. Both ratings have Stable Outlooks. Fitch has simultaneously affirmed Norway's Short-term foreign currency IDR at 'F1+' and Country Ceiling at 'AAA'.
The sovereign's strong balance sheet provides it with ample flexibility to deal with adverse shocks and an ageing population. Net general government financial assets amounted to 166% of GDP at end-2012, the highest of all 'AAA' sovereigns. North Sea petroleum revenues are prudently managed. Norway's strong policy framework has provided it with a long track record of macroeconomic stability. Mainland (ie non-oil) GDP growth has averaged 2.8%, and unemployment 3.5% over the past decade. The country's fiscal and current account surpluses, supported by oil exports, have both averaged 13.7% of GDP over the same period. However, the economy's high commodity dependence is, in and of itself, a rating weakness.
The household sector's debt/financial asset ratio in 2012 was 81%, compared with 33% in the eurozone. House prices grew by an average 12% pa from 2004-07, and are now 28% higher than their 2007 pre-crisis peak. The government's ability to use its fiscal resources as a buffer against a possible downturn is much greater than in other advanced economies. However, the following risk factors could, individually or collectively, put pressure on the 'AAA' rating: - A sustained oil price decline. This would represent a significant shock to Norway's mainland economy, which is leveraged to the petroleum sector. Further large increases in real wages, property prices and private sector credit would not be sustainable and would increase the risk of a sharp correction. - Ageing population.
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