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The Bank of Finland expects the national economy to recover slowly over the next three years, with GDP projected to grow by 0.5 percent in 2025. Growth is forecast to increase to 1.5 percent in 2026 and 1.6 percent in 2027.
The central bank’s latest forecast, published on Monday, outlines a cautious return to growth following a period of stagnation. However, the bank warns that external pressures continue to weigh on the outlook.
“Global economic uncertainty and persistent trade tensions are dampening the recovery,” the Bank of Finland said in its statement.
The bank expects inflation to remain moderate throughout the forecast period, offering some stability to household purchasing power. However, structural issues in public finances remain unresolved.
Despite positive growth figures, Finland’s debt-to-GDP ratio is expected to rise further. The budget will stay in deficit, with no near-term return to balance.
The bank pointed to recent tax cuts and increases in defence spending as key factors driving the deterioration of public finances. These measures, it said, are weakening the state’s ability to contain debt growth.
The Bank of Finland urged restraint in fiscal policy, emphasising the need to address long-term sustainability. Without changes, it noted, debt levels will continue to climb even as the broader economy expands.
HT
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Source: www.helsinkitimes.fi
