Estonia’s credit rating was affirmed by Standard & Poor’s Ratings Services, which cited the Baltic country’s strong public finances and resilient economic growth helped by export demand outside the euro area.
Standard & Poor’s kept Estonia’s long-term government bond rating at AA-, the fourth-highest investment grade, on par with Czech Republic and China. The ratings company left the outlook at stable. Moody’s and Fitch Ratings both rate Estonia as the fifth-highest investment grade.
Estonia’s economic growth has averaged about 5 percent since 2010, with Swedish, Finnish and Russian demand for its electronics, wood and machinery products helping the newest euro-area member to weather Europe’s debt crisis. The $22 billion economy, which still remains below output levels before the 20 percent slump in the wake of Lehman Brothers Holdings Inc.’s 2008 demise, expanded 3.2 percent last year, the European Union’s third-fastest pace.
“We expect that lower investment rates will keep economic growth at lower levels than before 2009, but that growth will still average 3.4 percent between 2013 and 2016,” S&P said today in an e-mailed statement from London. “Strong public finances and low government leverage remain key strengths, offsetting relatively low per-capita GDP for the rating category.”
Estonia had a preliminary budget deficit of 0.3 percent of gross domestic product last year after becoming the only euro-area member to run surpluses in 2010-2011. It had the lowest public debt among the region’s 17 members at the end of 2012 at 10.1 percent of GDP.