Germany is facing severe demographic challenges with more acute structural pressures than other advanced economies. Labour-market and pension reforms are essential, but fragmented politics risks eroding the country’s competitiveness.

The US and global economies remain resilient ahead of forthcoming US elections. However, Europe’s economic fragility poses challenges for credit despite support from the easing of interest rates.

Türkiye’s restrictive monetary policy continues to drive disinflation, bolster external accounts and replenish official reserves, improving the country’s long-term credit outlook despite persistently high inflation and a wide budget deficit.

Mario Draghi has reminded European policy makers of the critical need to regain economic ground lost to the United States, but the gap is less wide than it first appears, with the challenges of resilience and productivity concentrated in southern Europe.

Political deadlock in Germany and France limits the prospect of implementing fundamental reforms proposed by the Draghi report, which, together with Southern Europe’s productivity gap, challenges Europe’s growth outlook.

Belgium’s next federal government could become better aligned with the provincial administrations in Wallonia and Flanders, improving the prospects for reducing the budget deficit and stabilising public debt.

Political uncertainty, a challenging fiscal outlook, and the rising divergence in funding conditions between France and other core euro area sovereign borrowers underscore the importance for political stability and reform efforts to reduce the deficit.

Scope Ratings has updated its GRE Rating Methodology following the call for comments period, which concluded on 29 July 2024. The methodology changes are not expected to impact any current ratings.

Electoral success of populist far-right and far-left parties in Thuringia and Saxony highlights Germany’s fragmenting political landscape as mainstream parties lose ground. Looming policy uncertainty could delay regional budgets and slow economic growth.

Spain's GDP growth is outpacing the euro area, but expenditure pressures continue to challenge public finances, demanding comprehensive reforms on regional financing to ensure long-term sustainability.