Trade policy tightening and uncertainty about the path of the global economy will nevertheless slow the pace of this growth, and a clearer improvement in the economy will not be seen until next year, according to the Bank of Finland.
The Bank of Finland on Tuesday published its forecast for the Finnish economy for the years 2025–2027 where it said that growth in Finland’s economy is picking up slowly.
Inflation is low and will stay below 2% in the immediate years ahead and Finland’s public finances will continue to be in deficit.
Growth in Finland’s economy will be 0.5% this year, strengthening to 1.5% in 2026, and to 1.6% in 2027.
“Growth in the Finnish economy is picking up little by little, but the recovery will be hindered by the trade war and general uncertainty within the global economy,” said the Bank of Finland’s Head of Forecasting, Juuso Vanhala.
Finland’s exports will be slowed by the trade war and the unusually elevated level of economic uncertainty.
The tariffs on goods remain high, and uncertainty over the path of the global economy is greater than in earlier years.
However, with interest rates lower than before, the profitability of investment in the euro area will improve, which will also support Finnish exports in a difficult environment.
Following the slump in investment in recent years, lower interest rates will also revive the level of investment in Finland and elsewhere.
The weak economic conditions that have prevailed for some time are still casting a shadow over the labour market. Growth in the demand for labour will be held back by low growth in the economy.
“The labour market will pick up gradually as economic conditions improve. But we will still have to wait for a rise in employment, and the level of unemployment will continue to be high,” said Vanhala.
Inflation will stay below 2% this year and in 2026 and 2027. Consumer prices this year are affected by increases in product taxes and a fall in energy prices. Based on the spring 2025 negotiations on collective agreements, both nominal and real earnings will rise.
In the years of the forecast, private consumption growth will edge up slowly as consumer confidence rises and the labour market gradually gets moving. Household purchasing power will strengthen, because inflation will remain moderate and interest payments will be less than in earlier years.
Finland’s public finances will remain in deficit and the public debt-to-GDP ratio will continue to grow.
The public deficit will shrink in 2025, but this favourable trend will then slow down. Tax cuts and higher defence spending will weaken the fiscal balance.
- Bank of Finland
- Growth
- Forecast
- Negative
Source: www.dailyfinland.fi
