S&P Global Ratings revised its outlook on Croatia to stable from negative Dec. 16, while affirming the country's BB/B long- and short-term foreign- and local-currency sovereign credit ratings.
The outlook revision reflects S&P's expectation of more positive than expected growth and fiscal outcomes in 2016 because the adverse effects of political turmoil and snap elections have not been as pronounced as the agency anticipated. The stable outlook also reflects S&P's expectation of continued, although slower, economic growth against a potential widening of the fiscal deficit in 2017, alongside uncertainty regarding the pace and scale of government reforms over the next 12 months.
Although Croatia's banking system remains weighed down by nonperforming loans, these stood at 15% in mid-2016, down from 17% a year before, S&P Global Ratings said. The rating agency expects credit growth to rebound in 2017 as the economy rebounds.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.