Estonia’s Credit Rating Downgraded by Fitch Amid Economic Challenges

Estonia's credit rating falls to A+ from AA-, citing rising government debt and a predicted 1.6% economic contraction for this year.


Fitch Ratings has revised Estonia’s credit rating downwards from AA- to A+, citing a projected increase in government debt. Estonia’s debt burden is one of the smallest compared to peer nations despite the downgrade. Fitch anticipates the budget deficit will diminish to 2% by 2025 thanks to a government tax initiative. Economic growth obstacles are also noted, including the fallout from sanctions on Russia and Belarus, and downturns in the Nordic property market. The agency forecasts a 1.6% contraction this year but predicts a 3.5% rebound in 2024. Estonian inflation is down to 9.2%, largely due to dropping food prices, and Fitch predicts it to remain close to 5% at the year’s close. A significant uptick in debt, GDP, or geopolitical risk may induce further downgrades, while resilience from recent economic setbacks may warrant an upgrade. 

Source: majandus.postimees.ee

Jakub Warzecha

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