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European corporate credit
quality is sinking at what Moodys terms an "alarming" rate.
Causes include rising oil prices and possible
recession in the US. Also, the euro's strength will continue
to restrain EU economic growth. |
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Moody's Investors' Service
assigned 32 negative outlooks to European companies during
the 2008 first quarter. That is nearly triple the 11
positive assignments. This gap is the largest since 2001. It
indicates deteriorating credit quality within 12 to 18
months. |
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The International Monetary
Fund estimates that economic growth in the 15-nation euro
region will slow to 1.4% during 2008 from 2.6% in 2007. |
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The European
Commission has forecast a deteriorating outlook for public
finances in the Euro Zone. It expects conditions in France
to worsen disproportionately larger. |
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The
European
Commission expects a deficit for the bloc of 1.0% of
GDP this year. It had predicted 0.9% in its forecast
published November 9, 2007. |
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The euro zone is
forecast to post a 2009 deficit equal to 1.1% of GDP.
That compares to the previous forecast of 0.8%. |
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Germany's
deficit is now projected to be 0.5% of GDP for 2008 instead
of 0.1%. For 2009, its deficit is projected to be 0.2%,
changed from a surplus of 0.2%. |
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France's 2008
deficit forecast is increased to 2.9% of GDP from 2.6%. Its
2009 outlook was raised to the stability and growth pact's
threshold of 3.0% from 2.7%. |
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Italy's projected deficit is
unchanged at 2.3% of GDP for 2008. For 2009, it is increased
2.4% from 2.3%. |
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Outside the euro
zone, the UK's deficit forecast is increased to 3.3% of GDP
for 2008. It had been projected to be 3.0%. For 2009, it is
increased to 3.3% from 2.8%. |