London, 21 February

Ratings agency Fitch has affirmed Ireland’s credit rating, saying an acceleration of economic growth and a larger than expected fall in unemployment last year were signs of a broad-based recovery. 

Fitch said the outlook accompanying Ireland’s rating was stable, adding that Ireland has retained many of its structural strengths throughout the crisis.

“It is a wealthy, flexible economy and its per capita gross national income was USD 35,100 in 2013, more than twice the BBB median.”  While Moody’s and S&P have both upgraded their outlook on Ireland to positive, Fitch has kept it at stable. Fitch said a reduction in financial sector vulnerabilities, notably an improvement in banks’ asset quality and profitability, would be needed in order to upgrade Ireland’s rating from the current BBB+ level.

The BBB+ rating is seven notches below the top triple A rating, but above speculative or “junk” status. 

A weaker economic performance resulting in a substantial deterioration of banks’ existing loan portfolio was among the risk factors, Fitch said.

It warned post-crisis vulnerabilities remain in the banking sector, notwithstanding the improvement in economic conditions and the authorities’ efforts to accelerate mortgage resolution.

The credit rating agency said it assumed no further recapitalisation of the financial sector by the Government will be needed.

Fitch is one of the world’s three largest rating agencies, along with Moody’s and S&P. The ratings these agencies give to financial assets has a strong influence on the rate of interest issuers must offer. /RLU