Fitch Ratings has revised Finland’s credit outlook to negative while maintaining its Long-Term Foreign-Currency Issuer Default Rating at ‘AA+’. Finland’s strong governance, high income per capita, and eurozone membership support its ‘AA+’ rating, but challenges like rising debt and low economic growth have led to the negative outlook.
Key Factors Behind the Revision: Finland’s public debt has increased significantly, projected to reach 85% of GDP by 2026. Despite fiscal consolidation efforts, including a VAT rate increase, further steps are needed to stabilize the debt burden.
Economic and Fiscal Challenges: Finland’s economy is expected to contract in 2024, with rising unemployment and a wider fiscal deficit. Slow growth in the EU and high interest rates continue to pressure the economy, affecting long-term prospects.
Positive and Negative Rating Sensitivities: Failure to implement additional fiscal measures could lead to a downgrade, while successful policies could improve the outlook. For more details, refer to Fitch’s full rating action report.
Overall, Finland faces economic challenges that require decisive action to stabilize its debt and promote long-term growth.