The Finnish economy will grow by 2.5 per cent year-on-year in 2018 and 1.5 per cent year-on-year in 2019, according to the latest economic forecast of the Ministry of Finance.
The Ministry of Finance has therefore downgraded its forecast for both this and next year, having projected a growth rate of 3.0 per cent for 2018 and one of 1.7 per cent for 2019 as recently as in September.
“The growth rate is below the figure for 2017 but […] still high. World trade is slowing as further trade barriers are put in place, reducing export growth and also feeding through to investment expectations,” reads a press release issued by the Ministry of Finance on Monday.
The economy is forecast to expand by 1.3 per cent in 2020 and 1.1 per cent in 2021. The growth is expected to drop below the one per cent-mark in the medium term, which is lower than the growth potential in output.
“We are seeing a loss of momentum in the economic upswing, and growth is returning closer to a normal level,” summarised Mikko Spolander, the director general at the economics department of the Ministry of Finance.
“Further employment and growth are needed to boost the public finances if we are to withstand the rising pressures on expenditure. The economy’s resources should be used more effectively.”
The Ministry of Finance also highlighted that the positive economic situation and measures to curb rising expenditure are consolidating central government finances and will bring them all but into balance. Public debt as a percentage of gross domestic product is similarly expected to decrease in the years to come, although central government finances will begin to erode gradually in the early 2020s as a consequence of slower output growth and the completion of fiscal adjustment measures.
Modest increases in real wages will continue to drive labour demand in spite of the slowing of economic growth, according to the Ministry of Finance. The employment rate is consequently expected to rise to 73.3 per cent and the unemployment rate drop to 6.6 per cent in 2021.
Aleksi Teivainen – HT
Source: Uusi Suomi