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Research Finland: Debt Grows While Finland Struggles To Reform

Published 09/15/2015, 03:27 AM
Updated 05/14/2017, 06:45 AM

The Finnish economic outlook has weakened once again. GDP growth of 0.2% in Q2 was the slowest among euro area economies. Exports are taking longer than expected to resume growth and rising unemployment and public expenditure cuts limit domestic demand. We have revised our forecast down and expect Finnish GDP to be flat in 2015. Fitch has Finland up for review on 18 September. The new budget and reform plans may have bought Finland time but, in our view, Fitch is likely to strip Finland of its AAA rating. Despite a potential downgrade, we expect steady performance in Finnish government bonds going forward, as the RFGB market continues to be one of the biggest beneficiaries of the ECB QE programme.

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