Finland’s economic woes continue : alternative scenario

Abstract

According to the Bank of Finland’s December 2025 forecast the Finnish economy will begin to recover in 2026. The alternative scenario presented here assumes a delayed economic recovery and slower growth than in the baseline scenario. Consumer confidence will not improve but will instead remain low due to the uncertain times. Confidence is undermined on a longer term basis by the threat of unemployment, the extremely weak state of the public finances and Russia’s war in Ukraine. In addition to this, residential property values, which form the basis of household wealth, have been declining in recent years. Households tend to be risk-averse and consequently prefer to build up their savings and reduce their debt. Uncertainty about the global economy will also remain elevated, and the implementation of tariffs will slow Finnish export growth more than anticipated. In this alternative scenario, Finland’s economy will be almost 2% smaller in 2028 than under the baseline scenario.