The Finnish economy will grow by 0.8 percent next year, by 1.8 percent in 2026 and by 1.3 percent the following year, according to the Bank of Finland’s new forecast.
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The central bank also noted that private consumption is currently slow due to low confidence in the economy as well as rising unemployment. File photo. Image: Tiina Jutila / Yle
Finland is slowly moving out of its economic recession, the Bank of Finland said in a fresh forecast on Tuesday.
While economic growth will be slow at first, its momentum will gradually increase, according to the central bank.
“Inflation will no longer be eroding the increase in earnings, and the reduction in interest rates will fuel investment and consumption. Finland’s exports will also be rising. The recovery will be overshadowed by uncertainty in the outlook for the global economy. Government debt will continue to increase,” a summary said.
However, according to the bank’s forecast chief, Juuso Vanhala, the sluggish growth of the euro area economy is restraining the growth of Finnish exports.
The national economy will contract by 0.5 percent this year, according to the bank, which added that global economic uncertainty has held back export growth.
The bank also noted that private consumption is currently slow due to low confidence in the economy as well as rising unemployment.
On the other hand, it noted that further interest rate reductions are expected to support investments and consumption.
Next year, the central bank forecast that the economy will grow by 0.8 percent, by 1.8 percent in 2026 and by 1.3 percent the following year. It cited a few factors that it expects to help make this happen.
“The growth pick-up in the economy and the government’s substantial fiscal adjustment measures will strengthen Finland’s public finances, though these will continue to be deeply in deficit,” the bank said.
It added that it anticipates the country’s employment situation to improve in 2026-2027, “when labour demand picks up during the upswing”.
“The unemployment rate will fall to 7.7 percent, which is close to the level of structural unemployment,” the bank said.
Late last month the Ministry of Economic Affairs and Employment reported that the unemployment rate in October stood at 8.7 percent, a proportion reflecting around 285,200 unemployed jobseekers. The 8.7 percent unemployment rate is 1.1 percentage points higher than October 2023.
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Publish date : 2024-12-17 02:58:00
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