Near-term scenarios for Finland's economy : War in Ukraine will slow Finland’s GDP growth and increase inflation

Abstract

Russia’s invasion of Ukraine has cast a new veil of gloom over the outlook for Finland’s economy. There is considerable uncertainty over the economic impact of the Russia-Ukraine war, because the extent and duration of the war are not yet known, and neither do we know what economic policy measures will be taken to alleviate the economic effects. Amid this high uncertainty it is nevertheless possible to get an idea of the outlook for the economy by examining different scenarios. In the two scenarios presented here, the war in Ukraine will slow Finland’s GDP growth and increase inflation. In the current year, growth will slow to between 0.5% and 2%. The economic impact will be prolonged if it takes time to find replacements for the lost Russian market.