Bank of Finland articles on the economy
Bank of Finland Bulletin 5/2019 - Economic forecast for the Finnish economy
Published 17 Dec 2019
pdf, 2.46 MB
Bank of Finland Bulletin 4/2019 - Economic outlook for the global economy
Published 3 Oct 2019
pdf, 3.44 MB
Finland's economic transition still incomplete17 December 2019, Bank of Finland Bulletin 5/2019
The Finnish economy is still going through a period of transition in which it has to adjust to two large structural realignments.
How can we avoid a negative equilibrium of low gorwth and low inflation?3 October 2019, Bank of Finland Bulletin 4/2019
Slower-than-target inflation and a persistent decline in inflation expectations are key challenges for monetary policy. A negative equilibrium of prolonged low inflation and zero interest rates would fundamentally weaken monetary policy’s room for manoeuvre in balancing fluctuations in the economic cycle.
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The current loan-to-value cap on housing loans urgently needs to be accompanied by a new, more comprehensive cap on debt. This would take into account all a loan applicant’s debt relative to their income.
The more debt households take on during an economic upswing, the more likely they are to cut consumption when the economy begins to run out of steam.
The indebtedness of Finnish households relative to income has grown considerably since the turn of the millennium. A proportion of new residential mortgage holders have a heavy debt burden relative to their income.
Consumer credit can drive households into financial difficulties. New measures are needed to prevent increasing debt problems.
Finnish banks have granted relatively little credit to those industries most vulnerable to bankruptcies. This has helped minimise banks’ corporate credit risks.
Foreign investment in the Finnish and other Nordic property markets has increased. As a consequence the Finnish market is more vulnerable to external risks.
Investment in IT will improve banks’ long-term profitability, while weakening short-term profitability.
The accessible summary sums up the solutions presented in the Bank of Finland’s stability assessment that can get a grip on households’ excessive debt levels.
Finnish households have a worrying level of debt. Advance measures should be taken to prevent the accumulation of excessive debt.
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