Current account will remain in deficit

Abstract

The current account has fluctuated sharply in recent years, first because of the COVID-19 pandemic and then because of Russia’s war in Ukraine. Fluctuations in energy prices affect the balance of trade, and the current account deficit has indeed narrowed rapidly this year in the wake of a strengthening trade balance. Finland’s current account moved into deficit territory already in the early 2010s, when electrical engineering and electronics exports declined, weakening the balance of trade. A more careful examination of the service account and balance of trade shows that the current account is also likely to remain negative over the longer term despite the recent strengthening of the balance of trade.