The two rating agencies Fitch and DBRS have upheld the Grand Duchy's AAA rating, on the basis of the country's stable prospects. The triple A rating is the highest score awarded by a financial analysis company.
As far as the Fitch and DBRS rating agencies are concerned, Luxembourg is a financially stable, solvent country, with a financial market that remains one of the main driving forces behind the country's growth. This is what the two agencies confirmed recently by maintaining the Grand Duchy's AAA rating – the best possible score. The agencies' analysis emphasises that the country is well prepared for coping with the uncertainties of a potentially feverish economic situation.
Healthy economy, diversification assured
For Fitch and DBRS, the Grand Duchy's healthy and sustainable public financesremain one of the country's main advantages on the international scene. Fitch points more specifically to the Government's prudent budget strategy, which is based on two main pillars: keeping to the medium-term objective (objectif à moyen terme - OMT) of +0.5% GDP growth and maintaining public debt below 30% of GDP. The Grand Duchy is one of the few countries to achieve an AAA rating, and the country with the lowest public debt, with a ratio of 23% of GDP in 2019.
Biotechnology and health-related technologies form a key element in the strategy for the diversification of the Grand Duchy's economy. The development of this sector is in the hands of the Luxembourg HealthTech Cluster.
Economic mission to the United Arab Emirates (UAE) in January 2020. The aim of this meeting was to maintain the Grand Duchy's close economic and political relations with the UAE and promote the Luxembourg financial market in the region.
DBRS recalls for its part that the budgetary situation of the Central Administration features a surplus during 2018 and 2019, and points to the Grand Duchy's stable political environment and its robust institutional framework. The rating agency also acknowledges that efforts have been made by the Government to promote sustainable finance, accompany society's digitalisation, and diversify the Grand Duchy's economy into other sectors with high added value.
Risks that are possible but manageable
With regard to the risks that could influence the evolution of the economic situation, the agencies indicate the possible consequences of Brexit, the economic risks of the Covid-19 virus, the evolution of international taxationfor businesses , and a possible return of protectionism in the global economy. Despite an external environment that is much less favourable andgrowing uncertainties, the agencies consider that the risks that face the Grand Duchy are under control, and that the country has the resources to cope with possible upsets.