Next year bodes well for many Finns, according to S-Bank.
The supermarket bank predicts in its latest economic review that the employment situation will improve, that wages will creep up and that the increases in consumer prices will remain under control in Finland in 2018. “The tear looks bright for Finnish households,” summarises Timo Hirvonen, the chief economist at FIM, an investment bank that is part of S-Bank.
The outlook for households is bright particularly because inflation is expected remain moderate, while wage increases and the improved employment situation are set to continue bolstering the purchasing power of households.
S-Bank also upgraded its economic growth forecast for the country for this year from 3.0 to 3.2 per cent. The outlook for next year, especially, looks brighter than previously anticipated, with the bank expecting the economy to expand by 2.8 per cent and exports to grow by 6.5 per cent from the previous year. The growth in investment, on the other hand, is expected to slow down moderately to 5.8 per cent.
“The growth this year was driven by improvements in productivity. Next year, the focal point of growth will shift towards employment. Employment will grow at an ever faster rate, and there may even be the occasional shortage of skilled workers,” says Hirvonen.
The unemployment rate, he adds, should drop to 8.0 per cent in 2018.
The remainder of this year similarly bodes well for the national economy. The Finnish Tax Administration on Tuesday paid a total of 2.6 billion euros in tax refunds to a total of 3.7 million Finns.
“That is a very considerable sum, which corresponds to roughly one per cent of our gross domestic product. A part of the sum has traditionally been spent on Christmas gifts and another part on several savings instruments, such as funds,” tells Hirvonen.
Home prices, meanwhile, are projected to creep up only moderately in Finland in 2018. Hirvonen says the price increases will be driven by the positive economic outlook, almost record-high consumer confidence and the improving employment situation.
“Low interest rates will keep loan servicing costs in check and drive up demand for homes,” he adds.
The European Central Bank, however, is expected to raise its key interest rates in 2019, thus pushing up interest rates also in Finland, according to S-Bank.
Aleksi Teivainen – HT
Photo: Markku Ulander – Lehtikuva
Source: Uusi Suomi