Finnish economy to stagnate after two years: Nordea

The Finnish economic growth is set to keep its strong path this and next year, but the upward trend will be at a standstill after a couple of years, said Nordea Bank on Tuesday.

The Finnish economy will grow by 3 percent in 2018 and 2.5 percent in 2019, said Nordea, adding that household consumption will take over the role of key growth engine from exports and investment, thanks to positive labor market developments.

However, the bank warned that the growth will start to deteriorate at the turn of the decade.

One of the major reasons is that the improved competitiveness in recent years can turn even to a deteriorating track, according to Aki Kangasharju, chief economist at Nordea Bank.

The earnings level will rise this and next year by 2 percent. At the same time, the euro will remain strong in the near future.

"During the economic cycle, Finland's productivity growth will be fast, but now, with the improvement of employment, it has faded again. It is difficult to imagine that the productivity growth will accelerate to over one percent over the next a few years," said Kangasharju.

The worsening labor shortage and the decline of exports are also risk factors to the Finnish economic growth.

Furthermore, the economy is vulnerable to a significant escalation of trade tensions, and even an increase in uncertainty may be enough to cut international investment growth, which would mean slower export growth for Finland, noted Nordea.

Following three consecutive years of negative growth, the Finnish economy finally started to show some signs of recovery in 2015. Since 2016, the economy has grown gradually and achieved a bullish growth by 3.2 percent in 2017.