Economic growth to slow down in Finland

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

Finnish export and industry survived the flu with little damage because Finland produces various kinds of investment and industrial commodities for foreign companies. The current situation is different. Corin says 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 the growth of 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 the balancing of service consumption. Consumers can eat out and use other services after the corona restrictions have been dismantled. 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.

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