Finland's economic growth to slow down this year

According to the economic forecast released today by Aktia, Chief Economist Lasse Corin predicts that the economic growth will slow down this year to 1.6% and be a modest 0.9% next year. Russia's attack on Ukraine plunged the world's economy into a new period of uncertainty, as the coronaviruses epidemic has been driven to the background, says Lasse Corin.

Finnish export and industry survived the pandemic with little damage because Finland produces various kinds of investment and industrial commodities for foreign companies. The current situation is different. Corin believes that the economic uncertainty caused by the war is likely to be more drawn out, which weakens the willingness of foreign companies to invest and, consequently, the export prospects of Finnish companies.

There is a small gleam of hope on the horizon of Finland's exports. The depreciation of the euro will improve the competitiveness of Finnish export companies and soften the blow to their economies.

Corin believes that the greatest risk is related to the availability of imported goods rather than the increase in import prices.

The strain on private consumption this year and next year is caused by more than one factor, but consumption also has one obvious stimulus. The uncertainty and the inflation risks come with service consumption. The corona restrictions have been dismantled and consumers can finally eat out and use other services. Growth in service consumption will balance the otherwise weak outlook for consumption. Corin points out that the coronaviruses have not been defeated for good and the recovery of demand for services requires that the pandemic remains under control.

The acceleration of inflation in Finland is due to rising prices of imported products and not due to the exceptionally high domestic demand in the United States. Corin predicts consumer prices will increase, i.e. In 2022, the inflation will increase by 5.1% and fall to 1.9% in 2023. Finland is a small country. Corin says that we have no choice but to embrace the price development of the global market with open arms and that is what the high inflation rates in Finland are all about.