Moody's became the third rating agency to remove Finland's top-flight AAA credit rating Friday, saying it sees no improvement in the country's debt challenge over the coming five years. Moody's cut the Nordic country's rating by one notch to Aa1 following similar moves by rival rating agencies Fitch and S&P in 2014 and 2015. The Finnish economy faces weak growth over the coming years that will reduce its resilience to potential shocks, Moody's said.
Without economic improvement, the agency added, it foresees a deteriorating fiscal position "with no material reversal in the upward trend in the public sector debt burden likely in the next five years." Although Finland's economy resumed growing slowly last year after three years of recession, Moody's said it expects the country to expand only 1 percent per year over 2016-2017.
The country's debt burden will continue rising from 60 percent of GDP last year to 67 percent by 2018, it said. "The rise in Finland's debt load has been material and the measures planned to reverse it are not without challenges, particularly in a low-growth environment," Moody's said.