Finland's largest financial services provider, OP Financial Group, has sharply cut its forecast for the country's economic growth this year, warning that escalating tariffs on international trade are pushing the economy to the brink of recession, reported Xinhua.
In a press release revealed on Wednesday, the group said its economists now expect gross domestic product (GDP) to grow by just 1.0 percent in 2025, down from a previous estimate of 1.7 percent in January.
U.S.-initiated tariffs and retaliatory measures would reduce Finland's economic output by 1.5 percentage points over the next two years, the group noted.
"Politics is currently shaking up the economy in an exceptional way," said Reijo Heiskanen, chief economist at OP Financial Group. "In a situation where the cause of turbulence is not the economy itself but erratic policy decisions, confidence in the baseline forecast is lower than normal." He added that the uncertainty may persist.
The modest projected growth this year is largely attributed to carry-over effects from late 2024 and early 2025. However, the economy may slip into a fresh recession later in the year due to the impact of the new tariffs.
U.S. President Donald Trump unveiled so-called "reciprocal" tariffs early April, imposing a 10-percent baseline levy on all imports and higher rates on certain trading partners.
The tariffs have caused global stock markets to tumble and sparked widespread concerns. Despite Trump's announcement of a temporary 90-day pause on April 9, the 10-percent tariffs remain, and so do the industry concerns about the unpredictability and uncertainty of his policies.
Heiskanen said the outlook assumes the announced tariffs will remain in place. He estimated the annual cost of the tariffs to Finland's economy at over 4 billion euros (4.37 billion U.S. dollars) at 2025 levels.
The weakening economy is also expected to delay recovery in the labor market, while the general government budget is forecast to remain in deficit next year. This is due to slower-than-expected growth and rising defence spending, among other factors.
On a global scale, OP Financial warned that economic growth is approaching depression levels. It now expects global GDP growth of 2.5 percent in 2025 and 2.9 percent in 2026, both below the earlier forecast of 3.0 percent.
The group also cautioned that heightened uncertainty could trigger extended market volatility, which might inflict more economic damage in the short term than the tariffs themselves.
OP Financial Group comprises more than 100 cooperative banks and their central organization. It offers retail and commercial banking as well as insurance services across the country.
- Finland
- Growth forecast
- Down
- Tariff
Source: www.dailyfinland.fi
