World Bulletin/News Desk
Finland dropped out of the small group of euro nations with a full set of top credit ratings on Friday as Standard & Poor's cut its rating to 'AA+' from 'AAA', citing persistent economic growth problems.
Finland has yet to return to its 2008 economic output levels after exports dwindled due to the euro zone crisis, problems at its mobile phone and paper industries and the crisis over Ukraine.
Following the S&P cut, Germany and Luxembourg are the only euro states with a full set of top-grade ratings from all three main rating agencies.
Finland's "downgrade reflects our view of the risk that the Finnish economy could experience protracted stagnation because of its aging population and shrinking workforce, weakening external demand, loss of global market share... and relatively rigid labour market," S&P said in its report. It gave a stable outlook for the new rating.
Finland had taken pride in its top ratings. During the euro zone debt crisis, Alexander Stubb, now prime minister, said in 2011 that Darwinian principles should apply in the euro zone and the strongest economies should have the leading say in how the bloc is run.
However, this year, Finland has taken additional economic hits from the Ukraine crisis and Russia's slowdown: its eastern neighbour is one of its main trade partners.
Its flagship company Nokia, once global market leader in handsets, has long struggled to compete in smartphones with Apple and Google and sold its phones business to Microsoft in April. Meanwhile, the digital shift from print to online cut Europe's paper demand, leading to heavy restructuring at firms such as UPM-Kymmene and Stora Enso.
"Finnish exports have underperformed world trade since 2008, which we interpret as a sign of lower competitiveness, rendering an export-driven recovery unlikely," S&P added.
It also noted that despite weak economic performance Finnish labour costs increased by over one-fifth between 2007 and 2013, well above the euro zone's average of one-eighth.
"It is clear the (Finland's government bond) yields will jump somewhat on Monday," said chief economist Aki Kangasharju from Nordea Markets, referring to the higher returns investors will expect for the increased risk of holding the bonds. "The downgrade came sooner than expected."
The coalition government's finance minister Antti Rinne, a Social Democrat, said the downgrade was would not require re-evaluation of fiscal policy.
"Our growth outlook has deteriorated, the reasons are known and we have already taken measures to address them," he said in a statement.
The economy is widely expected to shrink for the third consecutive year in 2014 and to show minor recovery in 2015.Güncelleme Tarihi: 10 Ekim 2014, 22:43