Finland’s Economy Faces Stagnation, but Anticipates Growth in Later Half of the Year, Backed by Increased Purchasing Power and Investments in Green Transition

The Finnish economy is currently stagnant due to rising prices and interest rates, which have reduced demand and hindered growth. However, there is optimism for a turnaround in the latter part of the year. The Ministry of Finance’s Economic Survey predicts that increased household purchasing power and investments in the green transition will drive growth. While the GDP is expected to remain unchanged in 2023, there is anticipation of a 1.4% growth in 2024 and a further increase of 1.9% in 2025. Employment is projected to improve, with a decrease in the unemployment rate and an increase in the employment rate. The economic landscape in Finland presents both positive and negative factors, with services experiencing growth, but the industrial sector and construction industry facing challenges. Foreign trade has been impacted by the closure of the Russian market and a decline in tourism. Investments related to the green transition hold potential for economic growth, with ambitious plans for wind power and production plants. However, the general government deficit is widening, and the actions of the new government may influence the situation. The forecast assumes the current level of economic impact from Russia’s war of aggression and does not account for forthcoming government measures.