According to the economic forecast published by OP-Pohjola Group (OP), Finland’s gross domestic product (GDP) will grow by 2.7 per cent this year, despite the challenges of a continuing pandemic and the emergence of the Omicron variant of the coron virus.
OP economists predict that the increase in Covid infections will weaken Finland’s economic development only temporarily, in the first half of this year. The economic recovery will then continue towards the end of 2022 and even faster than previously forecast.
"Time and time again, each wave of coronavirus infections has had less and less of an impact on the economy. Once again, it is likely that the Omicron wave will slow economic growth rather than change the overall picture of the economy." says the OP Bank Group’s chief economist Reijo Heiskanen in a press release.
The Group’s forecast predicts that economic growth will continue to improve in the second half of this year until 2023, with GDP expected to grow by 1.7 per cent next year instead of the 1.4 per cent previously forecast.
"There is an exceptional inconsistency in the economy. The general climate is full of uncertainty and some companies are suffering a lot from the Covid pandemic, but according to all measures of the overall economy, between 2022 and 2023 we will be experiencing the strongest upturn since the late 1980s." Heiskanen wrote.
Employment is projected to improve further, with the unemployment rate falling to 6.3% in 2023, the lowest level since 1990.
Economic indicators remain positive
Although the worsening pandemic situation and the rapid rise in infections are once again hitting the economy, overall economic indicators have remained broadly positive, according to OP.
"Much of the economy is still recovering from the downturn in the services sector caused by the Covid pandemic. However, it is gratifying to see that industrial investment in growth is accelerating. It can also improve long-term growth prospects," Heiskanen added.
According to OP’s forecast, the growth of the Finnish economy will be broad this year and in 2023, and exports, investment and private consumption are expected to continue to grow.
Inflation is expected to slow down during 2022
OP also forecasts that the record high inflation in the euro area will slow down this year, but will remain higher than in the years before the pandemic.
Although inflation accelerated sharply at the end of last year, mainly due to higher energy prices, the rise in consumer prices in Finland at the end of 2021 was one of the lowest in the euro area.
OP’s economists forecast that inflation in Finland will average 2.7 per cent this year and will slow to just under 2 per cent in 2023.
Source: The Nordic Page