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Fitch affirms Finland at 'AAA'; Finish GDP to contract 0.1% in 2014

FXStreet (San Francisco) - Fitch Ratings affirmed Finland's sovereign rating at AAA with stable outlook according to a recent press release. "Finland's ratings are underpinned by a high-value-added economy, and strong political and social institutions. Finland's score on governance indicators is higher than even the 'AAA' peer median."

Fitch highlights "prudent fiscal policy management" as well as Government’s "net asset position of just under 60% of GDP due to the strong financial position of statutory pension plans."

Finland's GDP will contract by 0.1% in 2014 while Fitch also expect the "growth to pick up modestly over the years ahead." Government deficit to reach 2.7% of GDP in current year, above 2.3% in 2013. However Fitch affirms that consolidation measures will drive deficit to 2.6% in 2015 and 2.1% in 2016.

Other quotes:

Finland has a strong track record of prudent fiscal policy management and economic policy implementation. The general government sector has a net asset position of just under 60% of GDP due to the strong financial position of statutory pension plans.

Finland is also experiencing the effects of population ageing. The working-age population decreased between 2010 and 2013, and has fallen further in 1H14. The combination of the structural decline in key industrial sectors and a diminishing workforce has led to a sharp decline in productivity growth and in estimates of potential economic growth.

One area of uncertainty is whether the impact of EU restrictive measures on Russia - and counter-measures by Russia - would result in a greater-than-expected weakening of economic prospects in Russia, which is Finland's third-largest export market.

The new government confirmed the structural reform programme introduced in summer 2013 and its commitment to the spending limits outlined in March 2014. The government's parliamentary term ends in April 2015.

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