Moody's Changes Slovakia, Czech Republic Outlooks to Negative, Cites Reliance on Russian Gas
By Stephen Nakrosis
Moody's Investors Service on Friday said it was giving negative
outlooks to the Czech Republic and to Slovakia, citing their
reliance on Russian energy supplies.
Both nations had a stable outlook prior to the change.
In the case of Slovakia, Moody's cited the country's significant
energy dependence on Russia. "Given Slovakia's large industrial
sector and high interconnectedness with the rest of the European
Union, a permanent reduction in gas supply from Russia has the
potential to significantly weaken the country's economy which
would, in turn, negatively affect Slovakia's public finances and
compound pre-existing structural challenges such as population
ageing," Moody's said.
Regarding the Czech Republic, Moody's said its decision to lower
the outlook "reflects the increased risk of the materialization of
prolonged, severe gas supply disruptions from Russia which could
lead to rationing and push the country's economy in a deep
recession with negative implications for trend growth and a
material weakening of fiscal metrics."
In the wake of sanctions imposed following Russia's military
invasion of Ukraine, the flow of oil and gas from Russia has
slowed. As The Wall Street Journal reported last month, Russian
state-owned energy company Gazprom PJSC cut in half the amount of
gas flowing through the Nord Stream pipeline.
Moody's also cited energy reliance on Russian supply as a factor
when it changed its outlook on Italy to negative from stable on
Friday. "Significant reliance on gas for its energy exposes Italy
to further cuts in supply from Russia as well as higher energy
prices," Moody's said.
Write to Stephen Nakrosis at email@example.com
(END) Dow Jones Newswires
August 05, 2022 18:41 ET (22:41 GMT)
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