Denmark gets top marks despite financial turmoil


Tuesday, 12 July 2011
In a new analysis of the Danish economy, credit rating company Moody's has a very good feeling about the Danish economy, but points to the fact that the decline in the economy has weakened Denmark's financial strength considerably.

According to Moody’s, the effect of the recession has weakened the Danish government's financial strength. The assessment of the Danish government credit remains Aaa - the highest possible rating so far.


The high rating stems from among other things, that Denmark has "relatively" healthy public finances, while also there are identified proactive policy-making processes such as the government's 2020 plan bid to strengthen public finances.

The assessment comes as the big uncertainty about the economies of several southern European countries once again flare up. As such it is calming with a top rating from Moody's. But according to Sydbank there should be no pretext.

When the financial crisis erupted in 2008, Denmark had an Aaa rating.
“But still we were hit by the financial crisis. It is therefore no guarantee against financial turmoil that we have a good credit rating,” says leading analyst Michael Staehr from Sydbank.

Should Denmark lose its top rating, the consequences would be dramatic: Bond yields would immediately crack up, the currency (Danish Krona) would be exposed to pressures and the Danish central Bank will be forced to raise interest rates to defend the currency.

But the horror does not seen likely. Moody's emphasizes that the outlook for the rating is stable. An addition, which means that Moody's is not very much considering changes in its assessment of the Danish economy in the nearest term.
By Team

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