Nordea sees deceleration in economic growth

Economic growth in Finland is stalling, expected to slow down to 1% in 2020 and decelerate further to 0.5% in 2021, according to Nordea’s latest Economic Outlook.

Private consumption, on the back of solid wage growth of 3%, continues to underpin the economic growth, but the savings rate has been rising, eating away at consumption potential, said Nordea in a press release.

According to the outlook, lacklustre investment activity and cooling export demand will weigh on growth in the coming years.

It said the labour market is forming a bottleneck on the economy, with unemployment stuck at 6.7% despite rising vacancies in 2019.

The release said, “Structural reforms to support labour supply are needed urgently to boost productivity,” adding that the outlook for the world economy has brightened for the first time in a year and a half. While the bank’s forecast for global growth is revised slightly down since September, the picture is less bleak.

“The downside risks from the trade war and Brexit have receded, and the big central banks have come to the rescue once again. Yet, while the worst of the storms may be over, there’s still reason for caution, as geopolitical risks continue to cast a shadow over 2020 and beyond,” said Nordea Group Chief Economist Helge J Pedersen.

Overall, the bank thinks the Nordics stand on solid footing and are relatively well-equipped to handle the global slowdown.