Finland’s economy is expected to register a 0.5 percent contraction this year, according to a national economic forecast published by Pellervo Economic Research (PTT).
The institute identifies the increase in interest rates as a contributing factor to Finland’s economic decline. Domestically, it points to a significant drop in construction activity, and a decrease in private consumption as key drivers of the contraction. According to PTT, the loss in purchasing power will not be fully recovered in 2024. It predicts that inflation will drop to 5.7 percent in 2023, and further to 2.8 percent in 2024.
PTT highlights that while Finnish goods exports have remained strong, exports of services have been weaker. Although Finnish goods exports are projected to increase by 0.5 percent this year, overall exports are anticipated to decline by 0.7 percent due to a 4 percent contraction in service exports, partly attributed to the failure of tourism to return to pre-pandemic levels.
According to PTT, the economies of Finland’s most important export countries, Germany and Sweden, are also shrinking. However, the economies of Southern Europe are growing, it said.
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