Fitch affirms Latvia

Fitch Ratings said it affirmed the Republic of Latvia's long-term foreign-currency issuer default rating at BBB+, long-term local-currency issuer default rating at A-, short-term foreign-currency issuer default rating at F2 and country ceiling A+.

The outlook is negative.

The Latvian economy is clearly undergoing a sharp slowdown after an extended period of overheating, Fitch said.

However, persistent high inflation rates and continued wage growth, coupled with the scale of the imbalances in Latvia's external finances, suggest that it is too early to determine which path of adjustment the Latvian economy will follow, the agency said.

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