Estonia's AA- rating affirmed with stable outlook: rating agency

TALLINN, Dec. 11 (Xinhua) -- Rating agency Standard and Poor's on Monday affirmed Estonia's long-term sovereign rating at AA- with a stable outlook, and short-term rating at A-1+, the Estonian Ministry of Finance said in a statement.

The AA- rating is the highest rating assigned to Estonia by an international rating agency, supported by the state's strong institutions, European Union membership, the flexibility of the Estonian economy and strong state finances, it added.

In order to improve the country's ratings, Estonia needs to raise incomes to approach the eurozone average and reduce fluctuations in gross domestic products (GDP) growth and inflation, according to the rating agency.

Due to investment growth and the enlivening of construction activity supported by the current EU financing cycle, Estonia's economic development is accelerating and the economic outlook for the near future is positive, it noted.

The primary risks for Estonian economy are related to labor shortage and labor accessibility will in the longer perspective be restricted by a decrease in population, which may bring along wage growth that exceeds productivity, said the credit rating agency.

The Estonian economic growth forecast from 2017 to 2019 is 4.2 percent, 3.7 percent and 3.4 percent respectively, with private consumption growth to remain moderate on the base of moderate growth of real wages and employment, and external demand, especially from Finland and Russia, to remain strong, it noted.

Estonia's debt burden measured as a ratio to GDP will remain one of the smallest in the eurozone, and the government will remain a net lender in the future as well, with reserves exceeding debt obligations, said the agency.

The sovereign rating represents an evaluation by the rating agency of the debtor to meet its obligations in the future. Enditem