Finland’s economic growth stalls, but investment revival promises a new upswing
With the volatility of the global economy, Finland’s economic growth has once again begun to stall. MuniFin lowers its growth forecast for the current year to 1.0 percent. However, the positive underlying tone of the macroeconomy is strengthening, and the revival of private investments promises good prospects for municipal and regional economic development.
Hopes for the revival of Finland’s economy have not yet fully materialised, and economic growth has once again slowed down.
“The slowdown is due to, among other things, the sluggishness of foreign trade, the prolonged recession in the construction sector, the reduction in public consumption, and the general caution of consumers and businesses,” analyses MuniFin’s Chief Economist Timo Vesala. Due to the uncertainty related to the trade war and the weaker-than-expected outlook for construction, MuniFin lowers its growth forecast for the current year to 1.0 percent from the previous forecast of 1.5 percent.
“However, the growth of real incomes and the reduction in financing costs are inevitably turning Finland’s economic cycle upwards. Investments are finally starting, and consumer demand also seems to be gradually strengthening,” says Vesala.
There are also glimmers of hope in the labour market, with the total number of employed people even showing a slight increase. However, the spread of long-term unemployment and technological disruptions may slow down the recovery of employment.
“The economic recovery is creating new jobs, but they may be different and in different sectors than the jobs lost during the recession. Therefore, those who have lost their jobs are required to be adaptable and possibly retrain. As the economic cycle recovers, we may see labour shortages even if unemployment remains high,” says Vesala.