Piles of containers at the Vuosaari Harbour last September.An economic review published by the Ministry of Finance on Wednesday indicates that the Finnish economy will expand by no more than 0.2 per cent this year. Thereon, the economy is forecast to expand by 1.4 per cent in 2015 and by 1.6 per cent in 2016.

The Ministry of Finance has thereby lowered its projection for both this year, by 0.3 percentage points, and 2016, by 0.2 percentage points. Its growth forecast for 2015, in turn, remains unchanged.

With the exception of public investments, all demand components will in 2015 contribute to the recovery of the Finnish economy, according to the ministry. The value of exports is forecast to increase by 4.6 per cent. The development of the inflation-adjusted income of households, however, is to remain weak and the growth of private consumption modest.

The ministry has similarly downgraded its projection for the Finnish unemployment rate in 2015, from 8.4 to 8.5 per cent. Overall, the employment situation is expected to remain difficult, with both the duration of job vacancies and long-term unemployment on the rise.

In addition, the ministry expects the deficit in the public economy to shrink considerably in 2015 as a consequence of the adjustment measures adopted by the Government and the lacklustre economic recovery. Public debt as a percentage of GDP, however, will continue to grow in 2014—2016 and is forecast to pierce the threshold of 60 per cent already this year.

The risks identified in the forecast are largely associated with how quickly the Finnish economy can respond to an increase in global demand.

Paavo Teittinen – HS
Aleksi Teivainen – HT
Photo: Jussi Nukari / Lehtikuva