New York based agency Fitch Ratings said that it has revised the outlooks on the long-term foreign and local currency Issuer Default Ratings of Bulgaria, the Czech Republic, Latvia and Lithuania to stable from positive due to deterioration in the European economic and financial outlook.

The rating actions follow the agency' review of European Union countries that had a positive outlook. In its latest Global Economic Outlook, Fitch revised down its forecast for 2012 euro zone GDP growth to just 0.4%, from 0.8% in the October 3rd 2011 version of the GEO and from 1.8% in the June 28 GEO.

Mr Ed Parker MD in the EMEA Sovereign group at Fitch said that "Strong economic and financial linkages mean that countries in Central and Eastern Europe are being adversely affected by downward revisions to economic growth prospects and heightened financial stress in the Eurozone."

Against this backdrop, Fitch said it believes the probability of upgrades in the next 12 months for the four CEE countries has receded and stable outlooks better capture the balance of risks.

It said that "The previous positive outlooks were assigned in a more benign global economic environment and had reflected improving trends in country specific fundamentals, including a return to economic growth, progress in reducing budget deficits, the closing of prior large current account deficits (in Bulgaria, Latvia and Lithuania) and major pension reforms (in the Czech Republic)."

Weaker growth in the main export markets of countries in CEE will reduce their exports and GDP growth. In its December forecast round, Fitch has revised down its forecasts for 2012 GDP to 2.3% in Bulgaria (compared with 3.8% in June 2011), 0.7% in the Czech Republic (2.3% in June), 2.5% in Latvia (3.5% in June) and 2.5% in Lithuania (3.8% in June).