The Finnish government will succeed in wiping out its budget deficit by the end of next year, predicts the Research Institute of the Finnish Economy (Etla).
Etla on Tuesday published its most recent economic survey, forecasting that the country’s gross domestic product will grow by 2.8 per cent in 2018 and by 2.4 per cent in 2019. Finnish exports, meanwhile, are to increase by 4.0 per cent in 2018 and by 3.5 per cent in 2019, but only by 2.5 per cent in 2020.
The main reasons for the positive development are the ongoing global economic upswing and the improved competitiveness of Finland.
Etla estimated that wage increases will bolster the purchasing power of households and boost private consumption by roughly two per cent in 2018. The growth in private consumption is, however, projected to slow down modestly over the next two years due to rising inflation rates.
The growth in investments is similarly expected to slow down following the completion of several major infrastructure projects and settle at approximately three per cent by 2018, before rebounding to around 4.5 per cent in 2019.
It also estimated that the ranks of the employed will swell by roughly 100,000 between 2015 and 2019. The national employment rate, it adds, is to creep up to 71.6 per cent, putting the government within touching distance of its targets of creating 100,000 new jobs and raising the employment rate to 72 per cent.
The unemployment rate, meanwhile, is projected to fall to 8.1 per cent in 2018, to 7.7 per cent in 2019 and to 7.1 per cent in 2020. Etla highlights that the rate could drop to as low as 6.9 per cent by 2022 povided that the country manages to address its labour market mismatch.
The economic forecast is founded on the assumption that the global economy will continue its robust growth for at least another year.
Markku Kotilainen, a research director at Etla, reminds that the risk of weaker-than-forecast development persists: “The United States is set to tighten its monetary policy, as is soon the eurozone. This creates potential risks for the financial markets and, as a result, also for the real economy.”
“[US] President Donald Trump’s protectionist policies remain a cause for concern. Even the threat of a trade war has begun to seem real recently,” says Kotilainen.
Aleksi Teivainen – HT
Photo: Markku Ulander – Lehtikuva
Source: Uusi Suomi