Credit rating agency Standard & Poor’s announced Friday that it is affirming Finland’s credit rating at AA+, citing a stable outlook for the country. AA+ is the agency’s second-highest rating.
S&P said that it expected the Finnish economy to maintain its current growth trend, but projected that it would slow down in 2019.
The agency said that stable outlook reflected its expectation that economic growth would aid the country’s fiscal position and also mentioned a decision by Nordea Bank to relocate to Helsinki. I said it could raise the ratings if it sees an improvement in factors such as sustained strong current account surpluses.
In June, the Finance Ministry upgraded its GDP growth forecast for the country from 2.6 percent to 2.9 percent. However a subsequent economic survey released on Friday put growth this year at three percent.
The ministry’s latest forecast expects economic expansion to slow to 1.7 percent next year, citing lower household consumption due to slowing growth in real disposable incomes and a levelling off of exports in line with declining global trade.
Ratings depend on success of social and health care reform
Standard & Poor’s pointed out that Finland still needs to implement structural reforms to stave off "the growth challenges posed by a decreasing and aging workforce. It added that the government would also need to revive "growth potential so as to secure the long-term sustainability of public finances" to "build additional upside momentum to the ratings."
The agency said that it could "consider a downgrade if structural reforms don't succeed, leading to weaker growth or a substantial deterioration in Finland's fiscal performance, in turn leading to sharply increasing debt levels."
The government’s most significant structural reform programme, a long-incubated social and health care reform package known as "sote", hangs in the balance over seemingly-intractable political differences that threaten to delay rollout of the reform, and which need to be resolved before parliamentary elections due next April.