In Aktia’s economic forecast published today, chief economist Lasse Corin forecasts that economic growth will slow to 1.6 per cent this year and a modest 0.9 per cent next year. “The coronavirus pandemic and its economic effects have been left behind, Russia’s attack on Ukraine plunged into a new era of global economic uncertainty,” says Lasse Corin.
Finland’s exports and industry survived the pandemic with little damage, as Finland produces various investment and industrial goods for foreign companies. The current situation is different. “We expect the economic uncertainty caused by the war to stretch clearly, which will weaken the willingness of foreign companies to invest and thus the export prospects of Finnish companies,” says Corin.
There is also a small glimmer of hope on the horizon of Finnish exports. The weakening of the euro will improve the competitiveness of Finnish export companies and soften the blow to their economies.
With regard to imports, Corin sees that the greatest risk is related to the availability of imported goods and not to rising import prices.
The growth pressure on private consumption this year and next is driven by more than one factor, but consumption also has one obvious incentive. “The balance between uncertainty and inflation risks comes from the consumption of services. Interest rate restrictions have been lifted and consumers will finally be able to eat out and use other services. However, it is important to remember that the coronary virus has not been definitively defeated and the recovery in demand for services requires pandemic management, Corin points out.
In Finland, the acceleration in inflation is mainly due to rising prices for imported products and not to exceptionally high domestic demand, unlike in the United States. Corin forecasts that consumer prices will rise by 5.1% in 2022 and slow to 1.9% in 2023. “Finland is a small country. We have no choice but to embrace the development of world market prices, and that is what high inflation in Finland is all about, ”says Corin.
Source: The Nordic Page