Last week’s rating changes by S&P, which stripped the Netherlands of its triple A status and moved Spain from negative watch to stable, appeared to re-affirm the recent message from the economic data that the imbalances between the core and peripheral countries are narrowing. But with levels of GDP and unemployment still widely divergent, it would be wrong to view either the convergence in growth rates, or the rating agencies’ response, as a sign that the process of rebalancing across the euro-zone is well advanced or that the crisis in the periphery is over.
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