Finnish economy’s long-term growth outlook squeezed by a shrinking working-age population and weak productivity : long-term forecast

Abstract

Population ageing and dwindling growth in labour productivity are straining the long term growth outlook for Finland’s economy. This article presents the Bank of Finland’s scenarios for the growth outlook. Without additional investment in education, in attracting foreign talent and in fixed capital involving new technologies, the growth outlook for Finland’s economy will be weak. The long-term forecasting scenarios for economic growth combine the projections for human capital and fixed capital. In the baseline scenario, the growth outlook turns out to be similar to that of the Bank of Finland’s previous such scenario published in 2023. In the current baseline scenario, the highest growth rate for Finland’s gross domestic product (GDP) will be in the 2030s, averaging 1.8% annually. To strengthen the factors driving economic growth, it will be necessary to have well-focused policy measures that extend over parliamentary terms.