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Friday, 26.04.2024, 01:09
S&P affirms Estonia's rating at AA- with stable outlook
The AA- rating by S&P is the highest rating assigned to Estonia by an
international rating agency. The sovereign rating represents an evaluation by
the rating agency of the debtor to meet its obligations in the future.
According to S&P, Estonia's rating is supported by the state's strong
institutions, European Union membership, the flexibility of the Estonian
economy and strong state finances, the Ministry of Finance said.
The stable outlook indicates the agency's expectations of Estonia's
continued strong economic growth, and the agency is forecasting only a marginal
budget deficit for the next few years.
In order to raise the ratings it would be necessary that people's income
approaches that of the eurozone average and the fluctuations in GDP growth
and inflation are reduced.
Estonia's economic development is accelerating thanks to investment growth
and the enlivening of construction activity, which is supported by the current
EU financing cycle. Main risks are related to labor shortage.
The economic outlook for the near future is positive, but labor
accessibility will in the longer perspective restricted by a decrease in
population. The situation on the labor market may bring along a wage growth
that exceeds productivity.
The agency is anticipating a larger growth than before for Estonia in
2017-2019, by 4.2%, 3.7% and 3.4%, respectively. Private consumption growth
will remain moderate, being based on the moderate growth of real wages and
employment. External demand, especially from Finland and Russia, will remain
strong.
The state's debt burden measured as a ratio to GDP will remain one of the
smallest in the eurozone. The government will remain a net lender also in the
future, so that reserves exceed debt obligations.