Finland Times

Credit rating agency Fitch revised Finland's credit rating outlook to "negative" from "stable," but affirmed its triple-A rating, Finnish media reported on Saturday.

     Reports quoted a Fitch press release as saying that the revision of the outlook on Finland's long-term foreign and local currency Issuer Default Ratings (IDR) was due to the country's weak and deteriorated prospects for economic growth.

     The Finnish economy has experienced three consecutive years of negative growth since 2012. Fitch estimated that the country's real GDP (which is a macroeconomic measure of the value of economic output adjusted for price changes) is even 7 percent lower than the level of pre-financial crisis in the first quarter of 2008.

     Fitch therefore slightly lowered its forecast for Finland's GDP growth to 0.5 percent from 0.6 percent made in last review, and predicted the growth in 2016 will be 1.3 percent.

     In addition, the rating agency expected that Finland's general government deficit will be 2.7 percent in 2015, the same as last year's level, and will drop to 2.1 percent in 2016.

    

The country's public debt to GDP ratio is expected to soar to 63.3 percent, which exceeds the EU's threshold, by 2016, Fitch predicted.

     Finland was given triple-A rating based on its strong political and social institutions, said Fitch, adding that its scores on governance indicators were higher than the 'AAA' peer median.

     The general election of Finland will be held in the middle of April this year. Fitch pointed out that the new government will still face a challenge of a sustainability gap in public finance. The rating agency called on the new government to ensure debt sustainability through the long-planned structure reforms.

     So far, Moody's has maintained Finland's AAA status, but Standard & Poor's has downgraded Finland's credit rating from the best AAA to AA+ over the country's stagnant economic growth.