THE INTERNATIONAL Monetary Fund (IMF) and DBRS, a Toronto, Canada-headquartered credit rating agency, have both warned Finland of problems associated with its labour markets and household indebtedness.
The IMF on Thursday acknowledged that the country has recently experienced healthy economic growth and seen unemployment decrease to its lowest level since 2011.
“The rate in which new jobs are created […] has not picked up with the recovery, labour productivity remains weak, and the outlook for potential growth is constrained by a shrinking workforce,” it added in its report on Finland.
DBRS similarly estimated in its report that the decline of the working-age population is the greatest medium-term challenge facing Finland.
Both of the institutions also called attention to the mounting debt burden of households in the country.
DBRS viewed that the high level of indebtedness and high share of housing loans with variable rates have increased the vulnerability of households to shocks, specifically “to rapid increases in interest rates or income shocks”.
The IMF, meanwhile, expressed its doubts whether all borrowers are aware of the risks.
“Household debt has been increasing as the economy has recovered, and some borrowers appear vulnerable to interest rate increases. The growth in consumer credit raises the question of whether some borrowers are sufficiently informed about the conditions of their loans,” said the IMF.
The Bank of Finland reported at the beginning of the year that the growth in the value of outstanding housing loans has slowed down since mid-2018, growing only by 1.8 per cent in November compared to 2.1 per cent in June. The growth rate, it added, has not been as low since April 2015.
Aleksi Teivainen – HT
Source: Uusi Suomi