Fitch Ratings confirmed Germany's long-term foreign and local currency Issuer Default Rating at 'AAA' and gave a stable outlook for both the ratings. At the same time, the firm affirmed the country's short-term foreign currency IDR at 'F1+' and country ceiling at 'AAA'.
Germany's demonstrated fiscal prudence in recent years provides a high degree of confidence that the government will ensure that the public finances do not deteriorate on a sustained basis over the medium term following the crisis, Brian Coulton, Managing Director of Fitch said.
However, the firm said the country's public debt remained relatively high, as the economy was being hit hard by the global recession and up-front costs of financial sector support have been substantial.
Fitch expects Germany's general government deficit to rise to 4.5% of GDP by 2010 from 0.1% of GDP in 2008. Moreover, the firm expects the debt ratio to rise to 78% of GDP in 2010 from 66.7% in 2008, making the country the most indebted among the 'AAA' rated sovereigns.
Meanwhile, Fitch expects the German economy to contract by nearly 4% in 2009.
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