(MENAFN) The rating agency Moody's downgraded the economies of Italy, the Czech Republic, and Slovakia on Friday from "stable" to "negative," quoting issues with energy supply and the nations' reliance on Russian gas as factors in the decision.
Moody's stated that “the main drivers for lowering GDP growth forecasts for the Czech Republic are soaring energy costs and uncertainty on energy supply from Russia weighing on business investments, higher than initially expected consumer price inflation that is denting private consumption, ongoing global supply-chain frictions and a continuous weakening of the growth outlook in Czech Republic’s main trading partners, in particular Germany.”
The organization warned that Slovakia's situation might be considerably worse, noting that the landlocked nation imports all of its oil and 75 percent of its gas from Russia.
It added, “home to a large manufacturing sector (22.2 percent of GDP in 2021 against 17.5% in the euro area), Slovakia's economy is hence particularly exposed to severe energy supply disruptions: an abrupt cut from Russian gas deliveries, the likelihood of which has increased over the past few months, could lead to energy rationing.”
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