The Finnish economy is making a faltering return to growth and economy’s full-year growth for 2025 will be 0.3 percent, according to the forecast published by the Bank of Finland on Friday.
Growth, however, will pick up to 1.3 percent in 2026 and to 1.7 percent in 2027.
The latest interim forecast of the central bank said that the outlook for the corporate sector has improved, but low household confidence continues to hinder growth in the economy.
Due to the weak performance in the early part of the year, the Finnish economy’s full-year growth for 2025 will be 0.3%.
Inflation will remain moderate, and the high level of unemployment will gradually start to fall from the beginning of next year.
The increase in investment and the improved outlook for manufacturing are signs that the corporate sector is recovering.
The currently weak household consumption will slowly improve due to wage growth and low inflation, among other things.
Geopolitical and trade policy uncertainty will further weaken growth in the economy, although the most significant threats were eased by the summer’s tariff agreement, and demand is still being supported by the earlier interest rate cuts.
Growth may, however, be stimulated by the increase in defence spending and investment.
The greater the domestic content of defence procurements in the euro area, the more jobs would be created and incomes would grow, and the multiplier effect of this on the economy would be larger.
“An increase in defence spending will support euro area growth, especially in 2026 and 2027. The pressure on public finances caused by this expenditure, both in Finland and in Europe, can be reduced if investment is successfully allocated to common procurements and to activity that promotes the development of new technologies. Key to this are skilled individuals and the innovations they produce,” said Governor of the Bank of Finland and member of the ECB’s Governing Council Olli Rehn.
- Finland
- Growth
- Bank of Finland
- Forecast
Source: www.dailyfinland.fi
