Latest articles and blogs
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Alternative scenario: Finland’s economic woes continue
In this scenario, presented as an alternative to the Bank of Finland’s economic forecast, it is assumed that the economic recovery will be delayed and that growth will be slower than in the baseline scenario. Finland's economy will be almost 2% smaller in 2028 under the alternative scenario than in the baseline scenario.
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How it’s done – The models and analysis behind the Bank of Finland’s forecasts for the Finnish economy
When the Bank of Finland produces forecasts for the Finnish economy, the main tool it uses is Aino, which is a dynamic stochastic general equilibrium (DSGE) model. The article describes the forecasting process, the features of forecasting models and their key role in economic analysis at the Bank of Finland.
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Import tariffs and trade policy uncertainty will dampen economic growth
The United States is planning widespread tariffs on imported goods. If implemented, these would weaken Finland’s economic growth. Even greater harm to growth would be brought by any countermeasures adopted by other countries and they mounting uncertainty over the future direction of international trade policy.
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IT services are a key part of Finland’s service exports
The significance of Finland’s service exports has grown rapidly. Service exports comprised about one third of the total value of exports in 2023. Finland’s service export destinations are dominated by a fairly small number of countries, the most important being the United States.
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Finnish economy would recover more rapidly if exports and consumption pick up
At the turning points of business cycles, economic recovery has often turned out to be faster than forecast. Growth could pick up if consumers’ confidence in the economy and in their own finances were to strengthen more than expected and exports to grow more quickly than forecast.
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Alternative scenario: Higher interest rates are slowing inflation and economic growth in Finland
In Finland, variable rate mortgages are common, which to some extent is amplifying the impacts of monetary policy on economic growth and inflation. A key factor is the extent to which households have a financial margin to use as a buffer against increases in their loan servicing costs.
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Alternative scenario: Russia’s war in Ukraine could lead to a recession in Finland
Russia’s war in Ukraine threatens to push Finland and the entire euro area economy into recession. Disruptions in energy availability and supply chains may turn out to be more severe than anticipated, and market rates could rise more rapidly than expected.
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Alternative scenario: Supply-side disruptions slow growth also in Finland
In the absence of supply bottlenecks, Finland’s GDP would grow 0.5 of a percentage point faster in 2021. We assume the supply-side disruptions will be smoothed out after 2022, and will not leave long-term scars on the economy.
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Alternative scenario: Households use their savings more quickly than anticipated
If households spend the savings accumulated during the pandemic quickly, economic growth could be much stronger than estimated in the forecast for the Finnish economy for 2021–2023.
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What factors influence house prices and residential construction?
Abundant construction in the Helsinki metropolitan area has put a brake on apartment prices.
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Employment impact of exports has changed
Exports have had a significant indirect impact on employment. The overall drop in employment has, however, remained moderate, as employment has been sustained by domestic demand.