Bank of Finland bulletin : Economic outlook : Special issue

Abstract

PREFACE 1

EXECUTIVE SUMMARY 5

FINANCIAL MARKETS 11 Interest rates 11 Exchange rates 13 Stock markets 13 Housing prices 14 Financial position of households and the corporate sector 15 Box 1. Forecast assumptions 17 Box 2. Recent monetary policy in the euro area 19

SUPPLY 21 Output 21 Employment and labour 22 Productivity and capital 24 Box 3. Output gap estimates 26 Box 4. Employment and hours worked in the Nordic countries 29

DEMAND 31 Private consumption 31 General government 33 Investment 36 World economy and external demand 37 Export markets and export prices 40 Foreign trade 42 Current account 43

COSTS AND PRICES 45 Labour costs 45 Raw material prices 47 Import prices 48 Domestic producer prices 49 Consumer prices 51 Box 5. Bonus schemes and local bargaining gaining in importance 59 Box 6. Households' inflation expectations 57

RISK ASSESSMENT 59 International economy 59 Domestic economy 60 Alternative scenario: the impact on Finland of a stronger-than-forecast deterioration in the international economy 63

CHANGES FROM THE PREVIOUS FORECAST 66

ARTICLES AND BOXES FROM PREVIOUS PUBLICATIONS 68

Forecast tables T1