Household spending vital for growth in Finland

Domestic demand is decisive for the level of economic growth in Finland next year. This is the conclusion of the latest predictions issued by leading Finnish banks.

On Wednesday, Handelsbanken said that the growth of Finnish foreign trade has levelled off and also construction is slowing, but improved employment level has boosted the spending by households.

Tiina Helenius, chief economist at Handelsbanken, predicted the upward trend in growth will continue this and next year.

The bank did not change its previous predictions for 2.5 percent growth this year and 1.9 in 2019.

Findland's OP financial group on Tuesday lowered its growth prediction for 2019 to 2.1 percent from 2.3 percent, but kept this year at 2.8.

Uncertainty in the export markets cannot be disregarded, chief economist Reijo Heiskanen said.

OP noted that households are increasingly confident about their economy. Salaries are increasing more than the rate of inflation.

Statistics Finland gave the national employment rate on Tuesday as 71.9 percent. There are 75,000 more people at work than a year ago.

On Monday the S Bank, operated by the S retail chain, said that the better employment level and and increased salaries have made households spending "the engine of economic growth". The bank predicted the growth for 2018 at 3 percent and for 2019 at 2.3 percent.