Fitch Ratings affirmed Thursday Slovakia's long-term foreign and local currency Issuer Default Rating at 'A+', with a stable outlook. Moreover, the firm confirmed the short-term foreign currency IDR at 'F1' and the country ceiling at 'AAA'.

Fitch said Slovakia's ratings were supported by the country's institutional strengths and the underlying political stability owing to its membership with the EU. An attractive business environment encouraged large net inflows of foreign investments into the country and contributed to a stronger GDP growth, in line with wealthier EU nations, the firm said. Moreover, Slovakia membership to the Euro, along with a good policy record supported the ratings.

On the other hand, the high exposure of the economy to the fall in western European demand, notably that of cars will cause a significant contraction of GDP this year, Fitch said. The firm forecasts the GDP to shrink 3% this year, and follow it with a 1% growth next year. Meanwhile, Fitch noted that if the country experiences a more prolonged contraction than expected, it would have adverse effects on unemployment, bank asset quality and public finances, putting downward pressure on Slovakia's ratings.

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