Alternative scenario : Russia’s war in Ukraine could lead to a recession in Finland

Abstract

This alternative scenario examines what impact Russia’s war in Ukraine could have on the Finnish economy in the worst case. The scenario describes a situation where an escalation of the war causes the global economy to slacken more dramatically than in the baseline forecast, with weaker financing conditions, energy availability problems and exacerbated supply chain disruptions. Compared to the Bank of Finland’s June 2022 baseline forecast, a deepening crisis could drive the Finnish economy into recession, at the same time accelerating inflation significantly in the immediate years ahead. Unemployment would rise as output falls.