Fitch on Friday re-affirmed its AA+ credit rating and stable outlook for Finland.
The credit rating agency revealed that it has revised its growth estimate for Finland for 2017 to 3.0 per cent. The growth, it added, is expected to slow down to 2.4 per cent in 2018 and to 2.0 per cent in 2019 as a result of the narrowing of the positive output gap, the impact of inflation on disposable household income, and the diminishing of the gains from the competitiveness pact.
“Fitch expects growth to slow further towards a long-term average of 1.2 per cent as medium-term growth challenges persist, including an ageing population constraining growth in the labour force,” it stated in its country report.
The social and health care reform is another key issue for Finland. Fitch estimates that the reform could have a positive impact on public finances if it is delivered and implemented successfully.
The country’s track record of “sound policy implementation and strong commitment to reform from different political and social partners” will according to the credit rating agency reduce the risks associated with the complex and challenging reform.
Finland was recently warned about the risks arising from its ageing population also by DBRS, a Canadian credit rating agency. DBRS stated earlier this month that the contraction of the working-age population will constrain the country’s growth potential and undermine the sustainability of public finances in the medium-to-long term.
Aleksi Teivainen – HT
Photo: Heikki Saukkomaa – Lehtikuva