Economic Outlook no. 1189-1190 |Macroeconomic, Risk and Insolvency Outlook


Latest changes in country risks


Four countries with a changed country risk level in Q4 2012 all in a better direction


Costa Rica to Low from Medium. GDP growth will slow in 2013 from a very strong pace in 2012 but should remain in line with the longer-term trends. There are some vulnerabilities, such as large fiscal and current account defi- cits, but overall macroeconomic indi- cators are supportive.


Iceland to Sensitive from High. An IMF funding programme was completed successfully and policy adjustments have stabilised the economy, moderate GDP growth has recurred since 2011 and insolvencies began to decrease in 2012. Other improvements include progress on the unwinding of macroe- conomic imbalances and the restruc- turing of the banking sector.


Latvia and Lithuania to Sensitive from High. After severe financial crises and deep recessions, both economies have rebounded strongly. Macroeconomic indicators have strengthened mar- kedly―inflation, fiscal and current account deficits are all at adequate levels. Both the currency peg of the LVL and the currency board of the LTL are proving durable._DA


Euler Hermes


Iceland Latvia Lithuania


Change as of December 17, 2012


1 Low risk


2 Medium risk 3 Sensitive risk 4 High risk


Source: Euler Hermes, as of December 17, 2012


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