OREANDA-NEWS. June 06, 2014. The international rating agency Fitch has affirmed Estonia's long-term foreign and local currency issuer default ratings (IDR) at A+, with the outlook as Stable.

According to the agency Estonia's ratings are underpinned by its strong public finances. The ratio of government debt to gross domestic product of 10 percent is the lowest in the European Union and considerably below the average for countries with the same rating, the Finance Ministry said.

Estonia's external debt also decreased significantly in the last four years. The general government deficit, which has remained stable at 0.2 percent of GDP, could grow slightly this year but should decline again in 2015, Fitch said.

The agency expects Estonia's economic growth to pick up over the course of this year, averaging 1.7 percent, and accelerate to 3.1 percent in 2015.

As a small, open economy, Estonia is vulnerable to adverse shocks affecting its main trading partners. An area of uncertainty is the extent to which current geo-political tensions will affect economic prospects in Russia, an important trading partner, Fitch said. It named current demographic trends as a rating weakness, with both the total and the working-age population shrinking, which creates pressures on the labor market.

Estonia's rating could improve if economic growth resumed and wages increased in keeping with productivity and skills growth. Downside risks to the rating are possible deterioration of the economic situation of Estonia's key trading partners and fast wage growth without productivity improvements.