Economy likely to shrink by 5% in 2020: Nordea

Finland's economy will shrink by five percent this year but will rebound to three-percent growth in 2021, Nordea Financial Group said in a press release on Wednesday.

Previously, Nordea projected four percent growth for next year, reported Xinhua.

Nordea said that Finland has successfully overcome the first phase of the COVID-19 pandemic.

According to Statistics Finland, the country's gross domestic product (GDP) plunged by 6.4 percent in the second quarter of 2020 year-on-year.

Nordea noted that Finland's export-oriented economy is heavily dependent on the global economy.

Nordea expects the global economy to shrink by 3.5 percent this year and to expand by 5.3 percent in 2021.

Finnish Customs said on Monday that the country's exports slumped by 17.3 percent in the first half of 2020 on a year-on-year basis.

Currently, large economies are recovering from the pandemic at very different paces. While China rebuilds its economy at a rapid pace, economic recovery remains slow in the United States and the eurozone.

Nordea's economist Juho Kostiainen predicted in a press release that the trough caused by COVID-19 will be filled by the end of 2022. Nevertheless, the risk remains that Finland's export orders will continue to shrink, Kostiainen said, adding that maintaining cost competitiveness is a prerequisite for Finnish exports to return to growth.

Tuuli Koivu, chief economist at Nordea, noted that "Money is available via the recovery programs of states and central banks, but the issue is whether enterprises will have the guts to invest in an uncertain situation."