Growth rate praised, impact of ageing people warned

The Bank of Finland on Monday praised the country's economic growth, but warned of the aging society.

The economic growth would reach 3.1 percent this year and 2.5 percent in 2018. Private consumption will grow during the next few years as the overall employment situation and the purchase power of consumers improves.

Meanwhile, Governor of the Bank of Finland Erkki Liikanen warned of the looming challenges of the aging population and the difficulty of many young men to find jobs, according to national broadcaster Yle.

Liikanen told Yle that the aging population structure impacts the savings rate of households. It will remain negative and households will be deeper in debt. In mid-2017, Finnish household debt amounted to be 128 percent of the household income, while in 2020 the rate is predicted to be 129 percent.

Liikanen said that the share of pension in both the disposable income and in the capital holdings of households is growing. "Statistical household income is increasingly based on pensions and other social benefits."

Liikanen noted that the debt burden of young adult generations has kept growing and they can save mainly through amortizing their housing loans.

He said the employment situation of young men is a particular concern. The employment rate of men born since the beginning of the 1980s is 10 percentage points worse than those born at the start of the 1970s.

"This is a very negative vista for them," Liikanen said and called for both public and private measures to help those men to find jobs.

Finnish education authorities have earlier acknowledged young men more often fail to complete education for a profession than young women.