Fitch on Friday affirmed Finland's creditworthiness at AA+, the second-best rating possible, in its latest regular analysis. The agency said the rating reflected the country’s "long record of sound policymaking". It also noted that Finland's "low dependence on tourism had helped it avoid a deeper recession during the pandemic".
"The affirmation reflects Fitch's belief that the Finnish government, with its consensus-based political system and longstanding commitment to structural reform, will continue to adopt policies consistent with improving medium-term potential growth and to strengthen the sustainability of public finances, despite challenges from the pandemic," Fitch said in a statement.
Slow recovery
While Eurostat estimates the Finnish economy to have contracted by 2.8 percent last year, average declines in real GDP growth in the eurozone were considerably higher at 6.6 percent, according to Fitch.
"Finland's less restrictive lockdown in the early stages of the pandemic and low dependence on tourism helped avoid a deeper recession," the organisation said.
The ratings agency forecast the Finnish economy to expand by 2.3 percent this year and 2.9 percent in 2022. Business and consumer sentiment will, however, remain subdued due to new restrictions, according to Fitch, which said it expected economic activity to pick up in the second half of this year as coronavirus restrictions ease.
Fitch, however, said Finland's recovery was weaker than the majority of its AA rated peers and pointed to pre-pandemic issues of low productivity growth and a shrinking working age population.
Last January Fitch lowered its outlook for Finland from "positive" to "stable". This Issuer Default Rating (IDR) is meant to guide investors on the risk level associated with Finnish state bonds.
