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Moody's maintains Finland's solid debt rating, projects 3% growth next year

The rating firm predicts that Finland's recovery in 2021 "will be somewhat weaker than for some Western European peers".

Kyltti Moody's:in New Yorkin konttorin ulkopuolella.
Established in New York in 1909, Moody's is one of the 'big three' ratings agencies along with S&P and Fitch. Image: Andrew Gombert / EPA

The US financial firm Moody's has kept Finland's debt rating at Aa1, its second highest level. In a statement issued early Saturday Finnish time, it says the state's rating outlook remains stable.

Moody's rating for Finland has been at Aa1 for more than four years.

While the Covid-19 pandemic has caused a sharp shrinking of GDP, Moody's says that the country's economic strength remains supported by "high and comparatively evenly distributed wealth levels, as well as the economy's highly educated workforce and strong innovation capability."

Cheap loans will soften the debt blow

The company predicts that Finland's economic problems will be similar to that of its EU peers. Meanwhile the historically low cost of borrowing now available to the Finnish finance ministry – partly thanks to solid ratings by agencies such as Moody's, S&P and Fitch – will soften the impact of new debt.

Moody's hails "the government's strong commitment to post-crisis fiscal consolidation and structural reforms, which is reflective of the country's very strong institutional and governance framework".

The firm forecasts a slump of 6.5 percent in GDP this year, followed by a rebound to three percent growth in 2021.

However it says that Finland's recovery in 2021 will be "somewhat weaker than for some western European peers".

Meanwhile, the government's goal of boosting the employment rate to 75 percent by the end of 2023 will be tougher to achieve, it notes.

Praise for education, equality and innovation

The New York-based agency describes Finland's underlying economic strength remains solid, pointing out that it outpunches its weight as the 11th largest economy among the 27 EU member states. Meanwhile its GDP per capita in purchasing power parity is the EU's ninth highest.

"A very comprehensive social welfare system contribute to high standards of living and low income disparity," says Moody's, while "a supportive institutional framework that fosters innovation and the high quality of the education system that results in a well-educated workforce".

It also notes that Finland is ranked first in the European Commission's Digital Economy and Society Index this year.

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