Officials from the Ministry of Finance were photographed at a news conference in Helsinki on Monday, 5 October 2020. (Vesa Moilanen – Lehtikuva)


ALTHOUGH the Finnish economy has contracted for three consecutive quarters, the coronavirus pandemic has not had as dramatic an impact on the economy as in other parts of Europe, views the Ministry of Finance.

The Ministry of Finance on Monday released its latest economic review, predicting that the national economy will contract by 4.5 per cent in 2020.

The lull in the epidemic witnessed in the summer prompted households to move and consume, but the recovery remains slow due to lack of confidence and an increase in general uncertainty, with the sharp increase in infections and new restrictions casting the recovery further into doubt.

“The economy is at a turning point, with the epidemic rearing its head again,” summarised Mikko Spolander, the director general of the economics department at the Ministry of Finance.

“The recovery is at risk of being delayed if the future expectations of businesses and households deteriorate further. The expectations will not be clarified until there is an effective treatment and vaccine. When that occurs, the going may be brisk for some time.”

The Ministry of Finance on Monday said it expects the economy to recover gradually from the abrupt standstill witnessed in the first half of the year, with gross domestic product to grow by 2.6 per cent in 2021 and 1.7 per cent in 2022. Private consumption will lead the recovery, even though spending on private services is not expected to grow significantly.

Investments, meanwhile, are expected to recover sluggishly due to a decline in housing construction. Exports and manufacturing output are not expected to begin their growth until next year due to the lingering pandemic.

The debt burden of the public economy is projected to increase sharply in 2020 and 2021. The increase is to continue throughout the 2020s, because of the deficit in central and local government budgets, the lacklustre economic growth and the pressure arising from population ageing, according to the Ministry of Finance.

Aleksi Teivainen – HT
Source: Uusi Suomi