Finland Loses Last Top Credit Rating as Moody’s Downgrades Debtby
Finland was downgraded by Moody’s Investors Service, losing its last top credit rating just as the northernmost euro member is showing signs of emerging from a protracted economic stagnation.
The country’s debt rating was cut to Aa1 from Aaa, Moody’s said in a statement Friday. Finland had a triple-A rating from Moody’s since 1998. The country lost its top grade from Fitch in March and from S&P Global Ratings in 2014.
The reduction was based on “the significant economic challenges facing the Finnish economy and the weak growth that Moody’s expects the economy to record over the coming years,” as well as “deterioration in Finland’s fiscal position with no material reversal in the upward trend in the public sector debt burden likely in the next five years,” Moody’s said in a statement.
Finland left a three-year recession behind in 2015 after being battered by a slump in its paper industry, slowing export demand from Russia and the demise of Nokia’s mobile phone business. The government is now in the midst of pushing labor market parties to cut wages in order to restore further competitiveness.
Growth accelerated to a 2.4 percent annualized pace in the first three months of the year, pulled up by private consumption and investments, a report Friday showed. Still, the Organization for Economic Cooperation and Development this week predicted an expansion of just 1 percent this year as unemployment remains above 9 percent.