The exceptionally rapid recovery from the weak situation has led to a situation where the main obstacles to growth are no longer muted demand or the constraints imposed by the coronavirus pandemic, but the availability of resources. For example, the labor market has shifted rapidly from large-scale layoffs to labor shortages, while manufacturing bottlenecks have emerged.
“The challenges of economic growth have developed rapidly” condensed Wind Birch, Chief Economist of Nordea.
“Lack of capacity and global supply chain problems, as well as labor supply, are currently an obstacle to responding to rapidly growing demand. Solutions to these bottlenecks need to be found in order for growth to continue at a rapid pace. “
Industrial capacity utilization is rapidly recovering to high levels, and investment in production capacity requires growth to remain strong.
The Finnish summer was characterized by unusually warm weather and a rapid economic recovery. The tourism and accommodation sector, which was devastated by the pandemic, recovered strongly, driven by domestic tourism, and is expected to recover more slowly in the second half of the year.
Nordea emphasized the urgent need to address labor shortages.
“There are already a record number of job vacancies and the lack of a skilled workforce limits the growth potential of companies. At the same time, nearly 300,000 people are unemployed or laid off. Correcting mistakes requires quick action by the government, ”he stressed Juho Kostiainen, Nordea economist.
Measures could include promoting employment-based migration, improving the targeting of adult learning and increasing incentives for the social security system.
Labor market developments are also crucial for the outlook for inflation and interest rates. Wages in the United States have begun to recover strongly during the recovery phase.
“We are looking forward to seeing whether rapid inflation figures and a rapid recovery will accelerate wage developments in the euro area as well,” Koivu commented. “In the coming months, the US Federal Reserve will begin to move away from extremely loose monetary policy, and this will have a broad impact on the mood in the fixed income market.”
Aleksi Teivainen – HT
Source: The Nordic Page