Credits Risks in Europe's Emerging Economies are Growing

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Credits risks in Europe's emerging economies are growing, especially in the Baltic states, where the economies are showing signs of overheating and the process of entering the Eurozone is delayed, Fitch Ratings said.

The US ratings agency in its latest evaluation assigned positive ratings to only three out of twenty Emerging European countries; Armenia, Kazakhstan and Ukraine, while Hungary and Latvia received negative outlook.

Commenting on Hungary's budget adjustments, Fitch said it is seeing 'good progress': the government has made a strong start and Hungary's government deficit may come in below the original target this year. But the government will face a serious challenge in the H2 of its term, when risks of lax spending will clearly grow, Fitch warned.

It also said that despite Hungary’s promising budget corrections and improving external balance it is unlikely to upgrade the country's credit rating from negative to stable any time soon as question marks persist over its inflation and growth prospects.

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