OP’s economists forecast that Finland’s GDP will grow by 2.0% in 2026 and by 1.6% in 2027. According to the latest economic forecast, the economic outlook has remained unchanged.
"Confidence in the Finnish economy has improved above the euro area level in recent months, and several economic indicators suggest that the economy has already begun to recover. Trade policy risks have eased, but not disappeared," says Reijo Heiskanen, Chief Economist at OP Financial Group.
The overall picture for exports is positive, although increased US tariffs will dampen the outlook in the near future. The export outlook is supported by the recovery of key export markets in Northern Europe. In addition, Finnish export price competitiveness is at a relatively good level, despite the strengthening of the euro.
The lowest point in the investment cycle has been passed. Corporate investments are picking up and the lowest point in construction is being left behind. In addition, public investments in defence improve the outlook.
"Uncertainty affected private consumption in the early part of the year, and the savings rate rose to the same level as during the coronavirus crisis. The latest data supports a recovery in consumption, and the conditions for recovery are good. The growth of disposable income is strengthening and there is room for the savings rate to fall from the exceptionally high level of the spring," Heiskanen says.
The unemployment rate rose to around ten per cent in the summer. In addition to the decline in employment, the background is a high labour force participation rate relative to the economic trend, i.e. an abundant supply of labour. As economic growth recovers, employment will begin to improve, and the unemployment rate will start to decline.
The public sector deficit will remain at last year's levels this year and will decrease to closer to three per cent of gross domestic product in the coming years. When the private sector consumes and invests more, the current account remains balanced.
Global economy returns to average growth
The outlook for the global economy has improved after the trade war fears in the spring, even if trade policy risks have not disappeared. Key economic surveys suggest that economic development will pick up at the beginning of the year. The global economy will grow slightly slower this year on average than in recent years and will recover to a reasonable average pace in the coming years.
"The US economy has played a key role this year. Tariff increases will also weigh on US economic growth in the coming quarters, as rising consumer prices weaken consumer demand. The economy is gradually starting to recover again as the effects of, among other things, the easing of monetary policy and tariff increases fade," Heiskanen says.
The euro area economy grew at a rate of 1.5 per cent in the first half of the year. The outlook for the coming years is relatively stable.
"Economic growth will not quite reach the figures of early 2025, but the unemployment rate will remain at the lowest levels of the euro era. From Finland's perspective, it is positive that the German economy in particular is recovering," Heiskanen states.
Eurozone inflation has settled at around two per cent, where it is expected to remain in the coming years. The European Central Bank has recently signalled that it is monitoring the situation, and the market expects the decline in interest rates to be over.
The risks to the global economy are related to trade and geopolitics and are balanced. Uncertainty surrounding the outlook has nevertheless decreased clearly since the spring, but political and economic risks are still higher than average.
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