Central Europe ratings could be tested by new US policies, S&P says

BUDAPEST (Reuters) - Central European credit ratings, most of which carry a stable or positive outlook, are "quite resilient," but the way the new U.S. administration delivers on its pre-electoral promises could pose a challenge, S&P Global said on Thursday.

Under some scenarios, higher U.S. trade tariffs on the European Union and higher uncertainty over the Russia-Ukraine war might deter central Europe's growth via weaker external demand in advanced Europe, it said in a report on the Central and Eastern Europe Sovereign Rating Outlook for 2025.

The Czech Republic, Hungary and Slovakia are considered the most exposed through their deep ties with the German car sector and its vulnerability to the impact of any trade upheaval.

Poland, central Europe's largest economy, is likely to be less affected due to its lower reliance on exports and more diversified economy.

"The ratings are quite resilient. Our baselines could be tested by the way the new U.S. administration delivers on its pre-electoral promises," Lead Analyst for CEE & CIS Sovereign Ratings Karen Vartapetov told Reuters.

"Indirect spillovers through weakness in advanced Europe, including Germany, could be quite substantial," he said. "Baseline holds that ratings are going to be resilient, but the uncertainty over that baseline has somewhat increased."

(Reporting by Gergely Szakacs; editing by Barbara Lewis)