Boston, MA -- (SBWIRE) -- 05/30/2013 -- We are seeing growing indications that the Finnish government, increasingly concerned with the weak economic growth outlook, is preparing to loosen its self-imposed budget targets and adopt stimulatory measures such as reducing corporate taxes in an attempt to reignite economic activity. We believe such a development would prove positive for Finland's short-term political risk profile, improving cohesion in the policymaking process while also potentially providing a boost to growth prospects.

We believe that Finland's fiscal situation remains one of the most robust in Europe and do not expect it to suffer from a ratings downgrade in the near future, expecting it to remain one of just four remaining countries in the eurozone to be awarded AAA status from all three major ratings agencies.

Major Forecast Changes

In light of our expectations for weaker domestic demand in the first half of 2013, combined with deteriorating external demand across the course of the year, we have downgraded our growth forecasts for Finland. We now expect headline real GDP growth of 0.1% in 2013, from a previous forecast of 0.6%.

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Key Risks To Outlook

A deeper-than-anticipated eurozone recession represents a severe downside risk to our export forecasts for Finland. While we are already pencilling in a significant slowdown, a eurozone real GDP contraction of 1% or greater could severely impinge upon Finland's highly integrated export market, weighing heavily on Finland's real GDP growth in 2013 and beyond as a consequence.

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