Helsinki: Standard & Poor’s on Friday cut its outlook on Finland’s credit rating from stable to negative, citing persistent subpar growth that hampers the government’s efforts to achieve fiscal consolidation.
S&P affirmed its ‘AAA/A-1+’ credit ratings on Finland.
“The outlook revision reflects our view of Finland’s protracted economic stagnation, with average GDP per capita growth over the past decade of close to zero,” the agency said in a report.
“We consider that there are downside risks to growth and policy implementation.” Finland’s export-dependent economy is struggling to return to growth as Europe’s downturn and problems at the country’s flagship industries, paper-making and mobile phones, have triggered a two-year recession.
The Ukraine crisis and possible tough sanctions towards Russia, Finland’s most important trade partner, have added to the worries, and banks and the government have in recent months slashed their forecasts for the economy.
It is seen growing only 0.3-1.1 per cent this year and 1.4-2.2 per cent in 2015, but economists have added that a prolonged Ukraine crisis could push the economy back to recession.
Adding to uncertainties in Finland, analysts have said its quarrelsome coalition government could fall apart ahead of time following Prime Minister Jyrki Katainen’s surprise departure.
