According to the economic forecast published 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 because of the coronaviruses epidemic and its economic impact, says Lasse Corin.
The 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. We expect the economic uncertainty caused by the war to be more drawn out, which weakens the willingness of foreign companies to invest and, consequently, the export prospects of Finnish companies, says Corin.
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.
Consumption is one factor that is causing a strain on private consumption this year and next year, 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 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 that 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. In 2022, inflation will occur by 5.1% and drop to 1.9% in 2023. Finland is a small country. 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, says Corin.