The economic upswing in Finland has strengthened, bolstered by the improved performance of exports. Despite the improved growth, Finland’s external indebtedness will continue to grow. GDP is forecast to grow 2.1% in 2017, 1.7% in 2018 and 1.4% in 2019.
Savings are historically low on account of the low level of interest rates and strong consumer confidence. Households’ continued accumulation of debt does, however, entail risks for the economy.
According to the most recent quarterly national accounts, Finland’s GDP in the first quarter of 2017 grew 1.2% quarter on quarter and 2.7% year on year.
In both the United States and the euro area, economic growth has picked up and the labour market has strengthened without the build-up of significant wage and price pressures. This raises the question as to how far the economy can still be from its potential output.
The few ‘superstars’ of high productivity and profitability stand out in the large mass of firms. A one-size-fits-all economic policy is unsuitable in an environment of considerable heterogeneity in productivity and profitability.
Exports and productivity could grow faster than estimated in the Bank of Finland’s baseline forecast. However, a temporary period of faster growth would not suffice to resolve the problems with fiscal sustainability.
The global market share of Finnish exports has been declining continuously ever since the financial crisis. To what extent is the decline in market share explained by the structure of goods exports?
Digital technology has improved our well-being in ways that are difficult to measure in monetary terms. Not all the effects of digitalisation are fully reflected in GDP.
The faster growth will ameliorate the problems in the economy, but not solve them. The industrial base has narrowed, unemployment is high and the public finances are in deficit. It is important to continue the corrective measures in the economy.
