The Finnish economy is returning to growth

Abstract

The Finnish economy is returning to growth. Economic data have strengthened, and leading indicators suggest growth continuing through the forecast years. However, this growth is entirely dependent on domestic demand, and net exports remain weak. The Finnish economy is still lagging behind activity in the rest of the euro area, and real GDP will not recover its pre-financial crisis level even by the end of the forecast period. Meanwhile, the increasing role of the service sector in the economy slows productivity growth and the decline in the working-age population also dampens longer-term prospects. The Bank of Finland forecast foresees 1.1% GDP growth in 2016. The economy will continue to grow by 1.1% in 2017 and 1.0% in 2018.