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The future is brighter for Finland. Fitch on Friday upgraded its outlook for the country from stable to positive.
The future is brighter for Finland. Fitch on Friday upgraded its outlook for the country from stable to positive.

 

Fitch re-affirmed its credit rating and upgraded its outlook from stable to positive for Finland on Friday.

The New York, United States-based credit rating agency had not revised its outlook for Finland since March 2016, when it slashed the country’s credit rating from AAA to AA+ and upgraded the outlook from negative to stable.

“Finland’s medium-term potential growth has improved,” it states in its report. “Medium-term growth continues to be constrained by the demographic impact of an ageing population which constrains growth in the labour force, but potential growth could be boosted by the benefits of the 2017 competitiveness pact.”

Jan von Gerich, a chief strategist at Nordea, believes Finland is thereby one step closer to re-claiming the coveted triple-A credit rating.

“Finland is one step closer to returning to the triple-A club,” he tweeted on Saturday.

Von Gerich added, however, that a precondition for continuing on the positive trajectory is that also the next government remains committed to the current fiscal policy and resists the pressure to introduce considerable spending increases.

Also Fitch reminds that the fiscal policy direction will depend on the composition of the next government, which is to formed after the parliamentary elections held in April 2019.

“Fitch expects that while fiscal policy could be looser in some political scenarios, reliance on the traditional centrist parties to form a government would broadly maintain the current fiscal policy direction and debt reduction strategy,” it writes.

Pasi Kuoppamäki, an economist at Danske Bank, says the upgraded outlook is great news for Finland.

“The good economic situation is reflected also in public finances and has received recognition. Interest rates will stay low. Fitch expects the next government to continue to pare down the debt ratio,” he commented on Twitter.

Finland has been ousted from the triple-A club by all major credit rating agencies – by Standard & Poor’s in October 2014, by Fitch in March 2016 and by Moody’s in June 2016. Fitch on Friday became the first of the three agencies to crank up its outlook for the country.

Aleksi Teivainen – HT
Photo: Mikko Stig – Lehtikuva
Source: Uusi Suomi

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