Private consumption is forecast to recover, albeit at a slower rate than expected due to the cautious approach taken to lifting restrictions, in Finland in 2021–2022. (Vesa Moilanen – Lehtikuva)


ECONOMIC GROWTH in Finland will pick up to 2.6 per cent in 2021 and to 2.8 per cent in 2022, forecasts the Ministry of Finance.

The Ministry of Finance on Wednesday pointed out that although the economic situation has fluctuated notably in the first half of this year due to the coronavirus pandemic, the positive signs have strengthened clearly, with the outlook for both exports and investments becoming brighter.

“The latest information is indicative of an awaited turnaround in the economy,” said Mikko Spolander, the director of the economics department at the Ministry of Finance.

“Demand will recover, employment will grow and the chasm created by the pandemic will close rapidly. The economic upturn now at hand is an ideal time to support structural change in the economy and strengthen public finances.”

Private consumption will not increase at the pace forecast previously due to the cautious approach taken by the government to lifting the restrictions, according to the Ministry of Finance. With service consumption not forecast to pick up until the second half of the year, the recovery of private consumption will not hit top gear until next year.

The Ministry of Finance highlighted that in spite of the positive trajectory central government finances will show a deficit of over 10 million euros in 2021. Although the gap between revenue and expenditure will close next year as a result of sustained growth and the end of various support measures, the deficit will remain marked and the debt ratio will continue to creep up.

Its forecast for 2020, published in the second half of 2019, was more off the mark than usual due to the pandemic. The Ministry of Finance was expecting the gross domestic product to grow by one per cent, while in fact it contracted by 2.8 per cent, according to preliminary data from Statistics Finland.

The forecast proved wrong particularly in regards to private consumption, as the consumption of services and clothing fell unprecedentedly in the second quarter of last year and the household saving rate rose to its highest level since 1990.

Aleksi Teivainen – HT