Finland Times

Fitch also affirmed the issue ratings on country’s senior unsecured foreign and local currency bonds at 'AAA'.

In a release, Fitch said Finland's 'AAA' ratings reflect strong political and social institutions, a high level of human development and higher scores on governance indicators than even the 'AAA' median.

According to credit rating agency, Finland has a track record of sound fiscal policy management and economic policy execution.

Fitch said the government sector had a net asset position of around 59% of GDP in the first quarter of 2015 due to the strong financial position of statutory pension plans.

Fitch pointed out that Finland is among only seven OECD countries to enjoy a government net asset position. At the same time, the general government debt-to-GDP ratio in 2014 was 59% of GDP, higher than the 'AAA' median of 44.5 per cent.

According to Fitch, the structural decline of key industries and a shrinking labour force have led to a sharp decline in productivity growth and in estimates of potential growth.

The country's economy is adjusting to sector-specific shocks in key industries such as electronics, communications and forestry.

The country is also experiencing the impact of ageing population through a declining labour force and is also exposed to the weakness of Russia's economy-the second largest export market.

Fitch said the country's economic growth has been weak so far this year. The Real GDP was unchanged in the first quarter of 2015, while in the second quarter of the year the GDP rose to 0.2 per cent.

According to Fitch, investment and goods export growth have been weak, partly offset by private consumption and services exports. Fitch forecasts that GDP growth this year will be 0.3 per cent, a slight downward revision from the last review.

Fitch also revised its forecast for growth in  2016 to 1% from 1.3%, reflecting some negative impact on growth from the new government's fiscal consolidation plans.

The credit rating agency said the unemployment rate in July stood at 9.7 per cent which is one per cent higher than a year ago. Fitch expects the unemployment to average 9.5 per cent this year before edging back to 8.8 per cent by 2017.