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���������ֳ�’s Sector Outlook: Stable
Weaker global growth provides a tougher backdrop for emerging Europe sovereigns in 2020 than in recent years. Central and eastern European (CEE) countries are most exposed to the slowdown, which will test recent growth resilience and improvements in public finances. Commonwealth of Independent States (CIS) countries are less globally integrated and will benefit from a strengthening of policy frameworks, although progress varies considerably and gains are vulnerable to setbacks. Political and geopolitical risks will persist.

Rating Outlook: Stable
The outlook for sovereign credit ratings in emerging Europe is stable in 2020 following a wave of upgrades in 2019. Eighteen of the 22 sovereigns rated by ���������ֳ� in the region have Stable Outlooks. There are four sovereigns with Positive Outlooks; those for Bulgaria and Croatia reflect ongoing progress towards euro accession. Ukraine’s Positive Outlook captures prospects for reform under the new government and Lithuania’s reflects broad improvements in key credit metrics. There are no Negative Outlooks following the revision of that on Turkey to Stable in November. This is on track to be the first year since 2005 that there have been no Negative Outlooks at year-end.

Rating Distribution Weighting: Broad and Even Between ‘AA-’ and ‘B’
The distribution of ratings is broad and relatively even between ‘AA-’ and ‘B’, with 13 of the 22 rated sovereigns investment grade. Most CEE sovereigns are investment grade and CIS sovereigns are primarily sub-investment grade. Upgrades in 2019 occurred at all rating categories except ‘AA’, where low per capita income levels relative to peers are likely to constrain further upward momentum. Croatia regained investment grade in 2019 after seven years (and became the first sovereign to lose and then regain investment-grade status twice). No country lost it, but Turkey was downgraded for the third time since 2017.