Finland Times

Credit rating agency Standard & Poor's changed the outlook for Finland from stable to negative, but did not change the credit rating that remained at AA+.

     S&P said in its review published on Friday that the economic growth in Finland may remain below average despite the fact that the current government has committed itself to structural reforms.

     The agency believed that Finnish state debt grows in the future as well, unless economic activity recovers and the employment situation improves more than S&P expects.

     Finnish national broadcaster Yle noted that a change from "stable" to "negative" indicates a roughly 30 percent chance of a further decline in the S&P credit rating of Finland during the upcoming two years, if Finnish economy shows no sign of recovery. S&P downgraded Finland from AAA to AA+ a year ago.

    

Last week another agency Fitch chose to keep Finland in the best AAA group, but also depicted the future as negative. A decision from Moody's is due next week.

     Jan von Gerich, an analyst for the Nordea finance group, said that a change from stable to negative by S&P is in a way worse news than a would-be choice of Fitch or Moody's to drop Finland from the triple-A.

     "S&P is already on their way towards the next step in weakening the credit rating for Finland, even though the others have not done that yet", newspaper Helsingin Sanomat quoted von Gerich as saying.

     Standard & Poor's singled out as a positive sign the new business development within the forest industries. It listed as problems the demise of traditional industries such as electronics, poor competitive edge in costs, rapidly aging population and the labour market. S&P also mentioned the inefficiency in health care services.