Fitch Ratings Affirms Finland's Credit Rating at AA- with Stable Outlook

Fitch Ratings has maintained Finland's long-term credit rating at AA-, the third-highest possible rating, citing a stable outlook. The agency previously downgraded Finland's rating from AA+ to AA in July of last year.

Fitch highlighted several strengths supporting Finland's current rating, including its very strong governance, high per capita income, membership in the eurozone, and the robust financial standing of its pension system. These positive factors are counterbalanced by concerns over the country's high and increasing public debt, as well as its weak medium-term economic growth prospects.

The agency projects that Finland's public deficit will widen to 4.3% of GDP this year, up from 3.4% last year. This increase is primarily attributed to expenditures related to the F-35 fighter jet procurement, a decline in tax revenues, and rising interest expenses. Consequently, Fitch estimates that Finland's public debt will climb from 88.2% to 90.3% of GDP by the end of this year, significantly exceeding the projected median of 48.2% for countries with an AA rating.

Despite these fiscal challenges, Fitch forecasts Finland's economic growth to strengthen slightly, reaching 1.4% this year and 1.5% next year. However, the country continues to face high unemployment rates, which stood at 10.8% in May, among the highest in the European Union.