Vague global trend to slow Finnish growth

Uncertainty about the global economic trend will subdue the Finnish economic outlook, according to a forecast published by the Bank of Finland on Tuesday.

GDP will grow 1.6% in the current year and 1.5% in 2020. In 2021, growth will slow down to close to its potential of 1.3%, said the Finnish central bank in a press release.

Economic growth will be subdued both in the euro area and around the world, and the uncertainty will undermine the corporate sector’s willingness to invest.

Growth in Finland’s export markets will decelerate, but in the baseline forecast the reasonable level of growth in the euro area, improved competitiveness of Finnish exporters and relaxed financing conditions will continue to sustain the export growth.

During the forecast period economic growth will rest on domestic demand, i.e. consumption and investment.

Improved employment figures, pay hikes and the prevailing low inflation will bolster growth of purchasing power and hence private consumption. In addition, households’ financial room for manoeuvring will benefit from the low level of interest rates. Uncertainty over the direction of the economy in general will, however, subdue households’ appetite for consumption.