S&P changes Estonia view to negative

S&P said it changed its outlook for Estonia to negative from stable, citing the ongoing war between Russia and Ukraine.

“We revised the outlook to negative to reflect our view that a more protracted Russia-Ukraine war would have sizable negative spillover effects on small regional economies such as Estonia. Estonia benefits from its membership in the EU, euro area, and North Atlantic Treaty Organization (NATO). Yet despite these critical anchors, its strong creditworthiness could be pressured should the conflict lead to new economic, external, or fiscal costs. We expect that the Estonian economy has already entered a technical recession this year and our GDP growth projection for 2023 is 0%, with risks tilted to the downside,” S&P said in a press release.

The agency noted that even though Estonia’s inflation is declining it reached 22.5% year over year as of October.

S&P also affirmed Estonia’s AA sovereign credit rating.

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