Finland’s economy will grow despite Russia’s invasion of Ukraine, even though growth is slowing markedly. We forecast GDP to grow by 2.1 per cent this year and 1.0 per cent next year.
The economy will grow this year, boosted especially by private consumption and investment. The impact of net exports on growth is negative. Next year, the impact of private consumption and investment on growth will remain positive.
The greatest risks are related to new security policy situation. Other risks include persistent bottlenecks in world trade logistics and supply chains, sharp increases in commodity prices and possible new variants of the coronavirus.
Finland’s exports will grow by just over 5.5 per cent this year. Next year exports will recover at almost the same pace. The growth in exports is mainly due to the recovery in services exports as Russia’s shock is cutting growth in exports of goods.
Private consumption will grow by just over 2 per cent this year and one and a half per cent next year. Private consumption is gaining momentum from the opening up of the economy and the recovery of service consumption. Growth will nevertheless be curbed by the weakening of purchasing power stemming from the acceleration of inflation.
Investment will …read more