Page 37 - UTC Annual Report 2011

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executive
Director’s
letter
Unit Trust Corporation
Annual Report 2011 37
COUNTRY
RATING AS AT
JAN 1, 2011
CURRENT LONG
TERM RATING
RATING
MOVEMENT
AUSTRIA
AAA
AA+
BELGIUM
AA+
AA
CYPRUS
A
BB+
FRANCE
AAA
AA+
GREECE
BB+
CC
HUNGARY
BBB
BB+
IRELAND
A
BBB+
ITALY
A+
BBB+
MALTA
A
A-
PORTUGAL
A-
BB
SLOVAKIA
A+
A
SLOVENIA
AA
A+
SPAIN
AA
A
taBle 1
EUROZONE CREDIT RATING DOWNGRADES (2011)
In the fourth quarter of 2011 however, progress was made with the European Central Bank (ECB) providing
short-term liquidity to the region’s banking system via its Long-Term Refinancing Options (LTROs). This
provision of short-term liquidity has aided in reducing the yields on Italian and Spanish sovereign debt since
December. In early December 2011, most EU member states entered into a new fiscal agreement which
required that they limit structural deficits to 0.3% of GDP. The agreement also allows for extra-national
enforcement in the event of non-compliance.
Growth in the Emerging Market Economies (EMEs) of Brazil, India and China showed signs of
weakening. In Russia, the economic slow-down was not as marked as the other members of the BRIC
economic group. The slowdown in EMEs growth was partially due to monetary policies aimed at
containing inflationary pressures. Moreover, political upheavals in the Middle East and North
Africa (MENA), and more recently, the escalating tensions between Iran and the West over Iran’s
controversial nuclear enrichment program, have caused a great deal of anxiety.
These events have left many economists and financial market commentators concerned about
the prospect of a double-dip global recession, a scenario which would also have very serious
implications for the Caribbean Region and the local economy.