Freight carriages outside Vuosaari Harbour in Helsinki on 10 March 2024. The Bank of Finland reported last week that it expects the Finnish economy to emerge from its slump and return to a growth track toward the end of the year. (Vesa Moilanen – Lehtikuva)
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THE GROSS DOMESTIC PRODUCT of Finland will decline by 0.5 per cent in 2024, forecasts the Bank of Finland.
The Bank of Finland published its latest interim forecast last week, revealing that it has downgraded its expectations for this year by 0.3 percentage points. The national economy, however, is expected to start recovering from recession toward the end of the year at a pace that is slightly brisker than it forecast in December.
While the gross domestic product is forecast to grow by 1.7 per cent in 2025, the growth is to slow down to 1.5 per cent in 2026.
The central bank reminded that the national economy remains in recession as higher-than-accustomed consumer prices and interest rates continue to inhibit investments and private consumption.
“Although the economy’s performance has been weaker than forecast, the future outlook remains unchanged. The recession has already reached its lowest point, and we expect growth to be rekindled this year as household purchasing power strengthens and we start to see a return of general confidence in the economy,” Meri Obstbaum, the head of forecasting at the Bank of Finland, said in a press release on Friday.
Also supporting the recovery are the rejuvenation of export markets and the easing of the financing environment.
Companies resorting to furloughs rather than lay-offs has, according to the forecast, contributed to what is a robust employment situation in light of the economic conditions.
The forecast indicates, however, that the recession will have a belated impact on the labour market, with the employment rate for 20–64-year-olds expected to fall to 77.2 per cent by year-end. Although the economic growth is expected to lead to the ranks of the employed growing in 2025, the employment rate will not rebound above pre-recession levels also in 2026.
Slowing inflation has beefed up the purchasing power of consumers, with the real income of wage earners rising year-on-year in 2023. The Bank of Finland said it expects inflation to fall further in 2024, to below one per cent, but accelerate moderately in 2025 as a consequence of rises in service prices.
Aleksi Teivainen – HT
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Source: www.helsinkitimes.fi
