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🇫🇮 Finland /Economy & Trade

Nordea Forecasts Broad-Based Economic Growth for Finland

From Helsingin Sanomat · () Finnish

Translated from Finnish and summarized by DistantNews. Read the original for the full story.

At a glance

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  • Nordea raised its forecast for Finland’s economic growth to 1.7% this year and 2.0% in each of the following two years.
  • Industrial demand, higher investment and a gradual recovery in household consumption are expected to drive growth, with metal, defense and maritime industries performing strongly.
  • Nordea forecasts the unemployment rate will fall from an average of 10.7% this year to 9.0% next year and 8.0% the year after.

Finland’s economic outlook has brightened sharply, according to Nordea. The financial group now expects the economy to grow 1.7% this year, followed by 2.0% growth in each of the next two years. Its previous forecast had put this year’s growth at 1%.

Nordea economist Juho Kostiainen said Finland could enter a prolonged period of rapid growth without the economy overheating. He pointed to unused capacity in both the workforce and equipment.

Industrial demand, increased investment and a gradual recovery in household consumption are expected to lead the expansion. Export industries have continued to perform well, particularly in metals, defense and maritime manufacturing. Nordea said Finnish industrial companies have benefited from growth in global trade, while geopolitical uncertainty has increased defense investment.

Finland has the conditions for a longer phase of rapid growth without the risk of the economy overheating, since the economy has spare production capacity in both labor and equipment.

— Juho KostiainenNordea’s economist explained the basis for the upgraded growth outlook.

The boom in artificial intelligence is also driving demand for data centers, in addition to semiconductors. Data centers under construction in Finland have helped revive the domestic construction sector after several difficult years.

Improved economic news has strengthened consumer confidence, Nordea said, and private consumption has begun to grow after several weak years. Households have strong savings buffers, which could allow consumption to support growth for an extended period. Kostiainen cautioned that continued consumption growth will require better conditions in the labor market. Economic growth has not yet fully reached employment, but the rise in unemployment has begun to level off and companies’ hiring outlook has improved clearly during the year.

Nordea expects the unemployment rate to average 10.7% this year, then decline to 9.0% next year and 8.0% the following year.

Continued growth in consumption nevertheless requires support from an improving labor market.

— Juho KostiainenHe warned that stronger household spending depends on employment conditions.
About this summary

Originally published by Helsingin Sanomat in Finnish. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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