Ireland's AAA long-term and A-1+ short-term sovereign credit ratings were affirmed today with a stable outlook, credit rating agency Standard & Poor's said.
"The affirmation reflects Ireland's diversified and flexible economy; strong general government finances; and favorable demographic structure and manageable future pension obligations," S&P analyst Ms Mary Nnachi said in a statement.
"Over the medium term, Ireland's very strong credit standing should remain secure against nearly all foreseeable downside economic, political, and financial risks," Mr Nnachi added.
S&P said, however, that because inflation in Ireland was still well above the euro zone average, price pressures needed to be better contained in order to allow Ireland to stay competitive in the future.
S&P said continued employment growth, and productivity gains above the EU average, should ensure that Ireland's real GDP growth continues to outperform its peers over the medium term. "Continued political backing for expenditure restraint will help to keep the general government deficit close to one percent of GDP over the next few years," the ratings agency said.
Ireland's young population and the decision to begin pre- funding future pension liabilities in the National Pensions Reserve Fund also meant that the fiscal impact of the ageing of the population would be felt "much later and less severely than in other European countries," S&P said.
Irish bonds briefly outperfomed euro zone counterparts on the ratings news, with yield gap between 10-year Irish and German bonds settling back to one basis point.