World Economy

Fitch keeps Finland at Triple-A Credit Rating

Fitch keeps Finland at Triple-A Credit RatingFitch keeps Finland at Triple-A Credit Rating

The credit rating agency Fitch keeps AAA credit rating for Finland with stable outlook, said Fitch in a press release published early Saturday in Helsinki.

Fitch Ratings has affirmed Finland’s long-term foreign and local currency Issuer Default Ratings (IDR) at AAA, and considered the country’s credit rating outlook to be stable, Xinhua reported.

Finland’s Triple-A rating is based on its “high-value-added economy, and strong political and social institutions,” said the rating agency, “Finland has a strong track record of prudent fiscal policy management and economic policy implementation.”

Fitch sees the country’s credit rating outlook to be stable. However, it pointed out that “a continued rise in the government debt-to-GDP ratio” and “a persistently low potential growth rate of the economy” are major factors that could result in downgrade of credit ratings in the future.

The agency forecasted that Finland’s GDP growth to decline 0.1 percent this year. But the growth will pick up gently in the coming years by 1.1 percent in 2015 and 1.3 percent in 2016.

However, sanctions against Russia and counter-measures by Russia would be an uncertainty, which would possibly weaken the Russian economy and thus affect the Finnish exports.

 Growth Forecast

Earlier this week, Research Institute of Finnish Economy Etla lowered Finland’s economic growth forecast, while it predicted that Finland’s debt-to-GDP ratio will reach 62.5 percent next year, which exceeds the threshold of 60 percent regulated by the EU’s Growth and Stability Pact.

Some Finnish analysts speculated that this may imperil credit ratings for Finland.

The other major rating agencies, Standard & Poor’s and Moody’s are due to publish their assessments in early October.

Jan von Gerich, chief analyst at Nordea Bank, estimated that Moody’s will retain a stable outlook for Finland, in the contrast, the Standard & Poor’s may take a tougher line, implying a possibility of downgrade.

Reijo Heiskanen, chief economist at OP-Pohjola Group, told Finnish national broadcaster YLE that it will not cause problem to Finland if one of the three rating agencies downgrade its evaluation.

He suggested however that Finland should keep high ratings, which means that the government loan interest rates can be at low levels.