Finland had its credit grade cut to AA+ by Fitch Ratings, which cited a limited potential for a pickup in economic growth.
“Economic performance remains weak,” Fitch said in a statement Friday announcing the reduction to the second-highest credit grade.
Finland had a triple-A rating from Fitch since 1998. The company changed its outlook to negative in March 2015, five months after Standard & Poor’s lowered the nation to AA+. The lower credit rating hasn’t hurt the country’s ability to borrow. Since the S&P downgrade, 10-year government bond yields have fallen 0.44 percentage point to 0.58 percent, according to data compiled by Bloomberg.
“Our economy is not in balance,” Finnish Finance Minister Alexander Stubb said in a blog posting reacting to Fitch’s rating decision. Stubb said the cut shows that “those who observe us from outside have started to lose their faith in Finland’s capability to reform itself.”
Finland’s economy grew at a 0.4 percent clip in 2015 after three years of recession. The growth rate was the weakest in the European Union after Greece, according to Fitch.
The Finnish economy has endured multiple shocks: the collapse of its consumer electronics industry, once led by Nokia Oyj; a struggling paper sector; and a drop in trade with neighboring Russia.
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The government is attempting to boost exports by improving competitiveness. While the country’s major trade unions and employers have agreed on a plan to cut labor costs, about 40 percent of the members of the biggest union have rejected it.
Moody’s Investors Service grades Finland Aaa, its top rank.
(Updates with comment from finance minister in fourth paragraph.)
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