Dagong downgrades France credit rating

Updated: 2011-12-08 13:37


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BEIJING - Dagong Global Rating Co said Thursday it downgraded the local and foreign currency sovereign credit rating of France from AA- to A+ with a negative outlook, citing its sluggish economic growth, high government debt ratio, rising borrowing costs and exposure to Europe's debt crisis.

The rating agency said France's economy has been losing its competitive edge in recent years, with its share of global exports consistently dropping.

Dagong said it expects France's economic growth rate to slow to 1.7 percent and 0.3 percent in 2011 and 2012, respectively, while maintaining an annual average growth rate of 0.8 percent in the medium-term.

France is currently stuck between preventing an economic slowdown and reducing its deficit and its economy will continue to be affected by the deteriorating eurozone debt crisis, Dagong said.

The French banking system's exposure to Portugal, Italy, Ireland, Greece and Spain reached 852.36 billion euros, stoking concerns over the banks' asset quality and profitability, Dagong said.