Finnish growth to rebound before slowing down

The financial group believes Finland’s economy will grow by 2% this year but slow down to 0.6% in 2023. The country’s economy is still experiencing a post-pandemic recovery, particularly in service consumption and exports. [Shutterstock/Elle Aon]

The Finnish economy will continue to recover and bounce back from the COVID-19 pandemic before slowing down in 2023 due to growing inflation, tighter monetary policy, and the overall uncertainty caused by the Ukraine war, the OP Financial Group predicted in its forecast published on Monday.

The financial group believes Finland’s economy will grow by 2% this year but slow down to 0.6% in 2023. The country’s economy is still experiencing a post-pandemic recovery, particularly in service consumption and exports.

Private consumption will exceed pre-pandemic levels in the first half of this year. Meanwhile, real disposable income is predicted to fall in the second half of the year, while consumption is forecast to grow as consumers are expected to save less. In 2023, growth in consumption will be “sluggish”, OP added.

On exports, OP’s economists predict moderate overall growth this year. Finland’s trade with Russia will drop close to zero due to the war in Ukraine, though companies are said to be in a comparatively good position to find new markets if economic conditions remain favourable.

Consumer prices are predicted to rise by 5.4% this year and 2.8% in 2023. The price rises are largely explained by increasing energy prices. But the rising cost of grain, meat and dairy could put an additional €500 on household grocery bills this year, a report by the Natural Resources Institute Finland published on Tuesday (24 May) has found.

On a more positive note, a labour market forecast published by the economy and employment ministry on Wednesday (25 May) has found that employment continues to grow steadily. This year, the employment rate is expected to rise to 73.7%. By 2024, the rate should be 74.3%, it said.

Subscribe to our newsletters

Subscribe